rrom 
le  UBRARY 


Z^. 


E  A  R  L 
READE 

OBERN 


LIBRARY 

THE  UNIVERSITY 
OF  CALIEORNIA 

SANTA  BARBARA 


PRESENTED  BY 

GEORGE   OBERN 


BUSINESS  ADMINISTRATION 

A  Library  of  Business  Principles,  Practice,  and  Experience 

Editor-in-Chiej 
WALTER  D.  MOODY 

Former  General  Manager,  Chicago  Association  of  Commerce 

Managing  Director,  Chicago  Plan  Commission 

Author,  "Men  Who  Sell  Things" 

Managing  Editor 

WILLIAM  BETHKE,  M.A. 

Department  of  Business  Administration 
LaSalle  Extension  University 


LaSalle  Extension  University 


BUSINESS     ADMINISTRATION 

Being  an  organized  presentation  of  the  prob- 
lems of  business  management  prejiared  by  an 
unusual  group  of  successful  and  authoritative 

Organizers,  Educators,  and  Business  Experts 


Irving  R.  Allen 

Sales  Counselor,  Chicago 

William  Bethke,  M.A. 

Edtualional  Director 
LaSalU  Extension  University 

Ernest  Ludlow  Bogart,  Ph.D. 

Professor  of  Economics 
University  of  Illinois 

Theodore  E.  Burton,  LL.D. 

Former  United  States  Senator 

Harry  J.  Carpenter 

National  Bank  of  Commerce 
New  Ycfrk 

J.   W.   COBEY 

Formerly   Traffic   Manager,    National   Cash 
Register  Company 

E.  F.  Dahm,  B.A. 

LaSalle  Extension  University 
Formerly  Assistant  Director 
Retail  Research  Association 

Hugo  Diemer,  M.E. 

LaSalle  Extension  University 
Formerly  Personnel  Superintendent 
Winchester  Repeating  Arms  Company 

Coleman  duPont 

Chairman,  Equitable  Office  Building 
Corporation,  New  York 

B.  C.  Forbes 

Business  and  Financial  Writer 

Louis  Guenther 

Editor,  "Financial  World" 

Arthur  B.  Hall,  A.B. 

Hall  i'  Ellis,  Real  Estate,  Chicago 

Fred  L.  Ham,  M.B.A. 

Director,  Department  of  Business 
Administration,  LaSalle  Extension 
University 

F.  C.  Henderschott 

New  York  F.cison  Company 

Samuel  D.  Hirschl,  S.B.,  J.D. 
Harry  Arthur  Hopf,  M.C.S. 

Organization  Counsel 

Federal  Reserve  Bank,  New  York 

B.  Olney  Hough 

Editor,  "American  Exporter" 

E.  H.  Kastor 

H.  W.  Kastor  b"  Sons  Advertising 
Company,  Chicago 

Percy  H.  Johnston 

President,  Chemical  National  Bank 
New  York 


Edwin  Herbert  Lewis,  Ph.D.,  LL.D. 

Lewis  Institute,  Chicago 

Walter  D.  Moody 

Late  Managing  Director, 
Chicago  Plan  Commission 

Hugo  Munsterberg,  Ph.D.,  LL.D. 
Paul  H.  Nystrom,  Ph.D. 

Director,  Retail  Research  Association 
New  York 

C.  C.  Parsons 

Secretary-Treasurer,    Collateral    Mortgage 
Corporation  of  New  York 

Joseph  M.  Regan 

Editor,  "Bankers'  Monthly" 

Alexander  H.  Revell 

President,  Alexander  11.  Revell  is" 
Company,  Chicago 

George  E.  Roberts 

Vice  President,  National  City  Bank 
New  York 

Maurice    H.    Robinson,  Ph.D. 

Professor  of  Industry, 
University  of  Illinois 

Stanley  H.  Rose 

Foreign  Sales  Manager, 
Barber  Asphalt  Company 

Charles  M.  Schwab 

Bethlehem  Steel  Corporation 

I.  Leo  Sharfman 

Professor  of  Political  Economy 
Univecsity  of  Michigan 

Edward  M.  Skinner 

General  Manager,  Wilson  Brothers, 
Chicago 

J.  F.  Strombeck 

President,  Strombeck-Becker  Manufacturing 
Company,  Moline,  Illinois 

Theodore  N.  Vail 

Late  President,  American  Telephone 
and  Telegraph  Company 

F.  E.  Weakly 

General  Office  Manager,  Ilalsey,  Stuart 
(y  Company 

R.  S.  White 

Collection  Manager,   American  Steel  and 
Wire  Company,  Chicago 

H.  Parker  Willis,  Ph.D. 

Professor  of  Banking 
Columbia  University 

John  North  Willys 

President,  Willys-Overland  Company 

Richard  P.  Wilson 

Batavia  Rubber  Company 


RETAIL  STORE  MANAGEMENT 


PAUL  H.   NYSTROM,  Ph.  D. 

United  States  Rubber  Company 

Formerly  Assistant  Professor  of  Political  Economy,    University  of 

Wisconsin,  and  Associate  Professor  of  Economics, 

University  of  Minnesota 


La  Salle  Extension  University 
C  h  i  c  a  g^  o 

1922 


Copyright,  1917 
LaSallp;  Extension  University 


CONTENTS 

I,     The  Development  of  Retailing  Science 

Number   of   Retailers 1 

Capital  Invested   2 

Prevailing   Training    2 

Importance   to    Society 3 

Requirements  for  Success   3 

Beginnings   in   Education 4 

Future   Prospects    5 

Purpose  of  this  Book 6 

II.    Retail  Store  Location 

Essentials  of  Good  Location 8 

Analysis  of  Location 8 

Buying  Power  of  People 0 

Customs  of  the  People 10 

Character  of  the  Local  Industries 11 

Conditions  Affecting  Location 12 

Best  Retailers  Tend  to  Get  Best  Locations, ...  19 

III.    Buying  a  Business 

Fitness  for  Retailing 21 

Choosing  tlie  Location 22 

Analysis  of  the  Business  to  Be  Bought 23 

Purchasing  Real  Estate  v.  Retail  Business 24 

I'urchasiiig  Fixtures  and  Inventories 25 

Buying  Credits    26 

Ownership  Tests    27 

Buying  Goodwill    29 

Di.scounting  Iliwill    35 

•  •  • 

lU 


iv  Contents 

IV.     Store  Organization 

Fitting  Organization  to  Functions 38 

Purposes  of  Organization 39 

Charting  Organization   40 

Actual  Store  Organization 44 

Practical  Considerations  in  Organization 46 

The  General  Manager 47 

The  ^Merchandise  i\Ianager   48 

The  Advertising  Manager  50 

The  Store  Superintendent  51 

The  Office  Manager   52 

Miscellaneous  Officials    53 

Group  and  Committee  Organizations 54 

V.    Buying 

Characteristics  of  a  Good  Retail  Buyer 56 

Education  of  the  Buyer 58 

Factors  Affecting  What  to  Buy 60 

Studies  in  Local  Demands 61 

Policy  with  Reference  to  Novelties 62 

How  People  Spread  Their  Purchasing  Power. .  64 

How  to  Buy  68 

Speculative  Buying    68 

Buying  Lines   70 

Buying  Job  Lots 71 

System  in  Buying 72 

VI.    The  Store  Accounting  System 

The  Pm-pose  74 

Kinds  of  Accounts  to  Be  Kept 75 

Departmentalization  and  Its  Limits 76 

Departmental  Distribution  of  Expense 77 

Classification   of   Expenses 78 

The  Balance  Sheet 83 

VIL    The  Inventory 

Methods  of  Taking  Inventory 86 


Contents  v 

Information  to  Be  Gathered 87 

How  to  Figure  Cost  of  INIerchandise 91 

Perpetual  Inventory   92 

The  Individual  Stock  Record 93 

Perpetual  Inventory  by  Statistics 97 

Merchandise  Control  by  Statistics 100 

VIII.     Buying  System 

Buyer 's  Reports    102 

Handling  Purchase  Orders 105 

Purchase  Records 106 

IX.     Sales  System 

The  Sales  Slip 109 

The  Various  Kinds  of  Transactions 113 

.Inspection    113 

The    Cashier    System 114 

Auditing  System   114 

Credit  Sales  System 116 

X.     Efficiency  in  the  Receiving  Department 

How  to  Open  Cases 120 

How  to  Check  Merchandise 121 

Inspe<;tion  and  Testing 121 

XI.    Priclng  the  Goods 

The  General  Rule  to  Be  Followed 127 

Factors  Affecting  Pricing 128 

XII.     Retail  Store  Policies 

Value  of  Store  Policies 11^ 

Kinds  of  Policies 130 

Pricing  Policies   140 

Pricing  at  Different  ijevcis 141 

Policies  as  to  Store  Services 142 

Approval  Sales 142 

Cash  or  Credit  Policies 143 

Handling  of  Complaints 144 


vi  Contents 

XIII,  Art  op  Finding  Good  Employees 

The  Science  of  Employment 147 

The  Superintendent  of  Employees 148 

Analysis  of  Positions  to  Be  Filled 148 

Analysis  of  Qualifications  Required 149 

Sources  of  Applicants 153 

The  Employment  System 156 

The  Application  Blank 157 

Physical   Examination    160 

XIV.  The  Remuneration  of  Salespeople 

The  Percentage  of  Sales  Paid  to  Salespeople . .  164 

Working  Out  a  Just  System 164 

Time  Rate 167 

Commissions    167 

Combination  of  Time  Rates  and  Commission .  .  168 

Quota  and  Bonus  System 169 

How  to  Use  the  Quota  and  Bonus  Plan 169 

Helping  Salespeople  to  Understand  the  Quota 

and  Bonus  System 171 

Miscellaneous  Forms  of  Remuneration 172 

Profit-Sharing  Plans    173 

Purposes  of  Profit  Sharing 175 

XV.     Education  for  Salespeople 

Apprenticeships  in  the  Past 178 

Personal  Instruction 180 

Technical  Class  Instruction  in  Retailing 182 

Subjects  to  Be  Taught  Salespeople 183 

Knowledge   of  the   Goods 184 

Knowledge   of  Human  Nature  and   Salesman- 
ship      185 

Steps  in  the  Sale 186 

Cooperation      between       Stores     and      Public 

Schools    189 

Education  the  Schools  Can  Best  Give 190 

Education  the  Stores  Can  Best  Handle 191 

Store  Studies    192 


Contents  vii 

Educational  Trips  194 

The  Use  of  Bulletin  Boards 195 

The  Use  of  House  Organs 196 

Blunder   Slips    198 

Efficiency   Records    199 

Departmental  Conferences 200 

Rating  Salespeople   201 

XVI.     Welfare  Work 

Purpose  of  Welfare  Work 204 

Suitable  Working  Conditions 206 

Store  Lighting     207 

Store   Ventilation    208 

Store   Heating    210 

Store  Cleanliness     212 

Drinking  Water    212 

Dressing  Rooms,  Toilets,  etc 214 

Lunch  Rooms  215 

Rest  Rooms 216 

Seats  for  Salespeople 216 

Padded  Floors   217 

Prevention    of    Injuries 217 

Fire  Prevention   218 

Miscellaneous   Welfare    Activities 220 

Economic  Welfare  Work 220 

Personal  Relationship  to  Employees 222 

Health  or  Hygienic  Work 223 

The  Physical  Examination 223 

iModical   Services    225 

Hospital   and   Nurses 225 

Welfare    Work    and    tlm    Happiness    of    Em- 
ployees    225 

By-Iiaws  of  the  Mutual   Benefit 

Association    227 

XVTT.     De^iocbacy  in  the  Store 

Employees'  Share  in  Gove  rumen  t  of  Store.  .  .  .232 
Suggestions  from    Emp1oye<^s 232 


viii  Contents 


The  Employee's  Right  of  Appeal 233 

Security  of  Employ mcnt 234 

Right  to  Help  Determine  Working  Conditions. 285 

Right  to  Help  Determine  Wage 235 

The    Need    for   Boards    of    Ai-hitration    or   of 

Reference     235 

Final  Objects  of  Store  Democracy 236 


RETAIL  STORE  MANAGEMENT 


CHAPTER  I 
the  development  of  retailing  science 

Number  of  Retailers 

According  to  the  census  of  1910,  there  were  in  the 
United  States  1,195,029  retail  dealers.  In  addition  to  this 
great  number  of  people  engaged  in  conducting  stores  of 
one  kind  or  another,  there  were  enumerated  921,130  sales- 
people and  387,183  clerks  in  stores.  But  to  get  an  idea 
of  the  total  number  of  people  employed  in  the  retail 
business  in  this  country  there  should  be  added  to  the 
above  the  number  of  deliverymon,  laborers,  stockroom 
workers,  porters,  janitors,  cleaners,  engineers,  carpen- 
ters, display  men,  advertising  men,  floor  managers,  book- 
keepers, and  so  on.  It  is  safe  to  say  that  there  are 
now  more  than  3,000,000  people  employed  in  the  retail 
trade. 

Not  an  insignificant  number!  In  a  comparison  of  the 
retail  group  wilii  other  industrial  groups  of  workers, 
it  will  be  found  that  farmers  and  farm  laborers  are  the 
only  classes  that  exceed  retailers  and  retail  employees. 
No  single  line  of  manufacture  approaches  this  total. 
Tlie  number  of  people  employed  in  tlie  transportation  of 
goods  also  falls  sliort  of  this  number.  Yet  these  facts 
seem  hardly  to  have  been  realized  by  anyone. 

1 


2  Retail  Store  Management 

Capital  Invested 

There  are  no  figures  available  wliicli  show  the  capital 
invested  in  the  retail  business — buildings,  land,  and 
merchandise.  It  seems  safe  to  say  that  the  total  sales 
average  $10,000  per  store  for  these  million  dealers,  or 
more  than  $10,000,000,000  annuallj^  Estimating  a  turn- 
over of  two  and  one-half  tunes,  one  would  arrive  at  an 
average  stock  value  of  $4,000,000,000,  It  is  believed 
that  this  amount  is  a  conservative  estimate  of  the  value 
of  the  goods  constantly  on  dealers'  shelves. 

But  whatever  the  amount  may  be,  it  must  be  clear  that 
retailing  is  of  tremendous  importance  in  our  business 
life.  It  is  work  that  must  be  done.  A  great  number  of 
people  and  a  great  deal  of  capital  are  required  to  do  it. 

Prevailing  Training 

Like  every  other  important  occupation,  retailing  re- 
quires both  skill  and  knowledge  for  its  success.  But 
unlike  many  other  occupations  nothing  has  as  yet  been 
done  on  a  large  scale  to  provide  those  who  enter  this 
work  with  a  suitable  training.  Agricultural  schools  train 
for  farming;  trade  schools  for  the  various  mechanical 
trades;  the  professional  schools  for  the  practice  of  laXv, 
medicine,  and  the  ministry;  and  the  engineering  schools 
lay  the  foundation  for  the  technical  mastery  of  manu- 
facturing production.  The  distributor  of  goods,  the 
retailer  as  well  as  the  wholesaler,  can  scarcely  turn  to 
any  educational  institution  of  any  grade  for  specific 
scientific  and  constructive  help. 

Not  since  the  Civil  War  has  there  been  even  an  appren- 
ticeship system  in  this  country,  although  one  did  exist 
before  and  does  now  exist  in  the  great  European  coun- 
tries.   The  retailers  of  this  country  as  a  class,  in  so  far 


Development  of  Retailing  Science  3 

as  tliey  are  American  born,  are  truly  self-made.  Out  of 
the  unorganized  stniggle  for  self-existence  that  has  char- 
acterized the  retail  business  during  the  last  fifty  years, 
a  few  great  men  have  emerged  and  have  attained  the 
highest  public  eminences.  Among  these  are  Marshall 
Field,  John  Wanamaker,  and  Benjamin  Altman,  men 
who  have  developed  retailing  institutions  without  par- 
allel and  who  have  earned  the  respect  of  the  commercial 
world. 

Importance  to  Society 

But  the  cost  of  conducting  the  retail  business,  both  to 
the  individuals  who  enter  it  untrained  and  to  society, 
which  must  always  pay  the  bill  in  the  long  run,  is  enor- 
mous. The  wreckage  of  human  energy  ineffectively  and 
unscientifically  applied  is  appalling.  For  over  half  a 
century  it  has  been  repeatedl)^  stated  that  ''Over  90  per 
cent  of  those  who  enter  the  retail  business  fail."  It  is 
doubtful  whether  the  failure  rate  is  as  high  in  any  other 
important  vocation.  This  is  the  price  that  is  being  paid 
by  the  mass  of  retailers  who  enter  the  business  poorly 
prepared  by  training  for,  and  in  knowledge  of,  their 
work. 

Requirements  for  Success 

The  management  of  a  modern  retail  store  is  a 
full-sized  job  for  a  well-trained  man.  It  demands  a 
knowledge  of  finance  which,  in  its  elements,  at  least, 
corresponds  with  that  demanded  of  a  banker.  It  demands 
a  knowledge  of  merchandise  that  epitomizes  the  entire 
processes  of  production.  It  requires  a  knowledge  of 
public  demand  spocifically  applicable  to  a  given  com- 
munity, greater  than  any  other  person  need  have.  It 
involves  the  ability  to  employ,  train,  and  manage  em- 
ployees together  with  all  that  implies,  for  the  problems 


4  Retail  Store  Management 

of  labor  are  as  keen  in  the  retail  stores  as  in  any  other 
field.  It  demands  a  knowledge  of  salesmanship  and  of 
the  means  of  publicity.  It  demands  knowledge  and 
ability  to  select  and  to  make  the  best  use  of  a  retail 
store  location,  involving  such  matters  as  store  archi- 
tecture, window  construction,  interior  arrangement,  and 
many  other  details.  In  so  far  as  the  manager  of  a  retail 
business  is  able  to  decide  and  act  upon  exact  knowledge 
along  all  these  lines,  he  staiids  a  favorable  chance  of 
succeeding. 

Beginnings  in  Education 

It  would  be  wrong,  however,  to  give  the  impression 
that  nothing  has  as  yet  been  done  to  relieve  the  need 
for  scientific  study  of  retailing  problems.  In  fact,  what 
appears  to  be  a  very  widespread  and  important  move- 
ment in  this  direction  is  beginning  to  take  form.  Schools 
are  everywhere  considering  the  possible  methods  of  per- 
forming the  educational  w^ork  in  this  connection.  Several 
have  already  made  experiments  along  the  lines  of  con- 
ducting courses  for  various  classes  of  retail  workers. 

Trade  papers  are  pushing  the  propaganda  of  specific 
training  for  retailing,  and  the  contents  of  these  papers 
have  become  more  and  more  valuable  from  an  educa- 
tional standpoint.  To  anyone  who  has  read  the  material 
printed  in  trade  papers  for  the  last  twelve  or  fifteen 
years,  it  is  surprising  how  much  more  constructive  the 
articles  presented  now  are  compared  with  what  they  were 
in  the  past.  The  trade  paper  has  made  for  itself  a  solid 
place  in  the  program  for  more  efficient  retailing. 

The  work  carried  on  by  local  and  national  grocers* 
associations  h^s  been  productive  of  good  results,  espe- 
cially in  the  way  of  stimulating  thought  and  creating  a 
solidarity  of  feeling.     Wholesale  and  jobbers'  associa- 


Development  of  Retailing  Science  5 

tions  likewise  have  not  been  unmindful  of  the  retailer. 
The  service  books  and  literature  of  many  wholesalers 
and  jobbers  contain  valuable  suggestions,  as  do  many 
of  the  pamphlets  of  store  equipment  companies. 

A  number  of  good  books  have  appeared  during  the 
last  few  years  dealing  with  various  phases  of  retailing, 
all  of  which  are  contributing  to  the  general  demand  for 
more  and  more  educational  help.  The  function  of  busi- 
ness literature  in  the  past  has  been  to  create  a  desire  for 
itself  and  then  to  supply  the  demand.  Most  writers  have 
felt  themselves  called  upon  to  tell  why  their  articles 
should  be  read;  in  other  words,  they  have  had  to  sell 
as  well  as  produce  their  ideas  for  the  good  of  the  readers. 
It  must  be  admitted  that  eome  writers  have  been  m-ore 
skillful  in  the  former  than  in  the  latter.  In  the  future, 
it  seems  likely  that  less  effort  will  be  called  for  in  the 
selling  end,  and  more  on  producing  the  ideas  and  sug- 
gestions that  are  worth  while,  for  the  demand  has  alreadv 
overtaken  the  supply  at  many  points. 

Future  Prospects 

While  there  has  been  a  beginning  in  education  for  retail 
store  work,  it  can  hardly  be  said  to  be  more  than  a  mere 
beginning.  Tlio  main  field  of  work  both  as  to  the  subject 
matter  that  could  be  taught  and  as  to  the  number  of 
people  who  should  have  the  opportunity  to  study  is 
almost  untouched.  The  progress  to  come  during  the 
next  ten  years  will  quite  certainly  demonstrate  this. 

The  time  is  ripe,  and  the  demand  from  retail  workers 
of  all  grades  is  steadily  growing  in  favor  of  special 
retail  trade  schools.  Tlie  pressure  for  trained  people 
has  never  been  so  great  as  at  present  in  retail  store 
work.  Despite  tlie  fact  that  the  rank  and  file  of  average 
store  workers  get  comparatively  low  wages,  the  remu- 


6  Retail  Store  Management 

noratioii  for  sioecial  ability  or  special  knowledge  is  as 
great  as  in  any  other  occupation  that  could  be  named, 
or  even  greater.  It  seems  that  no  other  occupation  offers 
the  opportunity  to  the  practical  student  who  will  but 
learn  and  apply  himself  as  that  found  at  present  in  the 
retail  business. 

Purpose  of  this  Book 

In  response  to  the  demand  among  retail  store  workers, 
managers,  and  employees  who  wish  to  rise  in  their  work, 
this  textbook  on  store  management  has  been  prepared. 
Here  are  brought  together  the  essential  principles  and 
facts  concerning  the  location,  equipment,  organization, 
and  management  of  a  store.  As  a  text,  this  book 
must  deal  with  retailing  in  general.  It  is  not  an  expo- 
sition either  of  big  or  of  small  store  practice.  The 
principles  advanced  apply  equally  well  in  both  classes 
of  stores.  Illustrations  are  taken  from  both  classes  of 
institutions,  and  the  reader  is  urged  to  draw  upon  his 
own  experience  and  observation  for  others  at  every  stop. 
Every  practical  thinker  will  readily  see  how  to  make 
the  principles  apply  to  his  own  store  or  business. 

One  of  the  main  objects  of  this  textbook  is  to  help  the 
reader  to  gain  a  view  of  the  whole  business,  in  other 
words,  to  counteract  the  narrowing  tendencies  of  routine 
w^ork  within  any  department.  This  wider  contact  with 
retailing  problems  will  help  to  fit  the  reader  for  prog- 
ress and  advancement.  It  will  assist  the  store  proprie- 
tor to  manage  more  wisely  on  the  basis  of  the  best 
retailing  experience.  It  will  assist  all  business  men, 
bankers,  manufacturers,  salesmen,  credit  men,  etc.,  to  a 
better  understanding  and  appreciation  of  the  problems 
of  this  great  class  of  fellow  business  men. 

The   presentation   which   follows   is   not   theoretical. 


Development  of  Retailing  Science  7 

There  are  theories  regarding  retailing  practice  under 
development  at  the  present  time  with  which  every  wise 
retail  store  worker  will  want  to  be  familiar.  In  so  far 
as  it  has  been  necessary  for  purposes  of  clear  explana- 
tion, parts  of  these  theories  have  been  included,  but  the 
purpose  here  has  been  to  describe  retailing  as  it  is  and 
to  show  by  direction  and  suggestions  how  the  problems 
of  managing  a  retail  store  may  be  met. 

TEST  QUESTIONS 

1.  About  how  many  people  are  employed  in  the  retail  business 
in  tiie  United  States?    How  are  these  distributed  into  classes? 

2.  How  much  capital  is  invested  in  American  retail  business? 

3.  What  are  the  opportunities  for  special  training  in  the  retail 
field? 

4.  What  is  the  failure  rate  in  retail  businesses?    How  do  you 
account  for  its  high  percentage? 

5.  What  are  the  chief  business  requirements  for  successful 
management  of  retail  stores? 

6.  What  is  the  general  plan  of  this  text? 


CHAPTER  II 
retail  store  location 

Essentials  of  Good  Location 

The  most  essential  element  of  a  good  store  location 
is  the  opportunity  it  offers  to  sell  goods  where  people 
naturally  come  to  trade,  either  because  of  convenience 
or  because  of  habit.  The  main  street  of  any  town  is  the 
natural  retail  trading  district  of  the  town  because  it  is 
the  main  artery  of  travel.  The  distance  from  the  main 
street  to  the  side  streets  is  so  much  resistance  that  must 
be  overcome  in  order  to  secure  trade  on  the  side  streets. 
The  corner  is  usually  better  than  the  middle  of  a  block 
for  the  reason  that  it  marks  the  convergence  of  two 
arteries  of  travel.  It  is  convenient  for  two  streams  of 
people.  A  good  principle  to  follow  is  to  take  the  store 
to  the  people  and  not  to  expect  the  people  to  come  out 
of  their  usual  ways  to  the  store. 

Analysis  of  Location 

passers-by 

Other  things  being  equal,  the  location  passed  by  the 
greatest  number  of  people  is  the  most  vahiable  for  retail 
store  purposes.  But  other  things  are  not  equal.  For 
example,  large  crowds  of  working  people  hurrying  to 
and  from  factories  at  times  of  opening  and  closing  are 
not  likely  customers  for  any  class  of  retail  goods,  except, 

8 


Retail  Store  Location  9 

perhaps,  cheap  lunches,  tobacco,  and  saloon  goods. 
People  bent  on  leisure  passing  a  place  are  not  good 
customers  except  for  certain  classes  of  goods,  such  as 
refreshments  that  can  be  consumed  on  the  premises, 
lunches,  fruits,  etc.  A  count  of  the  number  of  people 
passing  a  place,  if  including  many  of  such  classes  of 
people,  will  not  serve  in  comparing  locations. 

The  number  of  people  who  come  out  to  shop  and  to  buy 
is  the  real  factor  of  importance  in  the  total  that  pass 
a  location.  In  the  main  parts  of  the  town  during  most 
hours  of  the  day  it  may  be  taken  for  granted  that  many 
of  the  passers-by  are  prospective  customers  for  some 
classes  of  retail  goods.  Thus  a  count  of  the  number  of 
people  who  pass  a  given  location,  if  judiciously  made, 
will  offer  a  guide  as  to  the  relative  quality  of  the 
location. 

Buying  Power  of  People 

Even  when  it  is  known  how  many  passers-by  are  pro- 
spective buyers,  it  is  also  of  importance  to  determine 
what  their  buying  power  is.  This  is  determined  by  their 
incomes.  A  family  with  an  income  of  $600  per  year 
must  spend  practically  all  of  it  for  the  barest  necessities 
of  life.  The  family  witli  an  income  of  $1,200  per  year 
will  buy  not  only  a  fuller  line  of  necessities  but  also 
some  of  the  merchandise  that  might  be  classed  as  com- 
forts and  luxuries.  The  higher  the  family  incomes,  as 
a  inile,  the  greater  the  proportion  of  the  total  amount 
expended  for  pleasure,  for  refinement,  and  for  mer- 
chandise that  ministers  to  the  artistic  impulses.  The 
amount  of  money  expended  for  food  increases  as  the 
family  income  increasos,  but  not  so  fast;  thus  the  rolative 
amount  expended  for  food  diminishes  as  the  income 
increases.     A  family  with  an  income  of  only  $000  por 


10  Ectoil  Store  Management 

year  spends  nearly  $400  for  food,  or  two-thirds  of  tlie 
total  amount.  But  the  family  with  an  income  of  $1,200 
per  year  spends  less  than  $600,  or  less  than  half  for 
food.  The  percentage  expended  for  clothing  seems  to 
be  about  the  same  for  families  of  all  sizes  of  incomes 
below  $2,500  down  to  $300  per  year.  From  12  to  15 
per  cent  goes  to  wearing  apparel.  A  family  with  an 
income  of  $600  per  year  would  expend  about  $75  per 
year  for  clothing  and  shoes,  while  the  family  with  an 
income  of  $1,200  would  spend  $150  or  more  for  such 
goods. 

It  will  be  seen,  therefore,  that  it  makes  a  good  deal 
of  difference  to  the  man  who  proposes  to  start  a  store 
in  a  given  community  whether  the  people  of  that  com- 
munity receive  high  or  low  incomes.  This  fact  alone 
will  determine  the  amount  of  business  to  be  had  in  the 
community  and  the  character  of  the  goods  that  will  be 
demanded.  It  is  obvious  that  a  careful  compilation  of 
statistical  information  on  population,  occupations,  earn- 
ing power,  and  consumption  might  prove  exceedingly 
valuable  in  determining  upon  a  store  location. 

Customs  of  the  People 

The  customs  of  the  people  in  the  community  make 
some  important  differences  in  the  character  of  trade. 
Eeligious  principles  cause  some  people  to  eat  no  meat 
on  Fridays,  others  to  eat  no  meat  at  all,  others  to  eat 
no  meat  of  certain  kinds,  as  for  example,  pork.  In  some 
communities,  dominated  by  the  older  ideals  of  puritan- 
ism,  but  little  "finery"  is  consumed. 

Communities  differ  greatly  in  the  kinds  and  qualities 
of  foods  used,  even  after  all  these  years  of  high-pressure 
national  advertising  of  food  manufacturers.  In  some 
communities  fashionable  goods  are  much  more  in  demand 


Retail  Store  Location  11 

than  in  others,  and  the  rate  of  change  of  style  varies 
greatly  even  between  communities  only  a  few  miles  apart. 
All  such  factors  have  to  be  considered  by  the  one  who 
proposes  to  establish  a  store  at  a  certain  location. 

Character  of  the  Local  Industries 

It  is  obvious  that  the  character  of  the  industries  that 
keep  the  people  in  the  community  employed  is  another 
factor  to  be  considered.  If  the  industries  are  of  a  per- 
manent kind  with  the  prospect  of  growth  in  the  future, 
it  may  be  advisable  to  select  a  location  and  open  a  store 
even  if  immediate  trade  prospects  are  not  particularly 
strong.  But  if  the  industries  are  of  a  temporary  nature, 
then  that  fact  needs  to  be  considered  in  locating  the 
business.  One  might  ask  how  long  the  industries  may 
continue,  what  is  likely  to  happen  when  they  shut  down, 
what  industries,  if  any,  are  likely  to  take  their  place, 
how  long  it  will  take  to  make  the  transition,  and  so  forth. 
The  location  that  may  be  ever  so  good  today  and  this  year 
may  be  worthless  a  year  hence  after  the  productive  enter- 
prises upon  which  the  community  now  exists  are  shut 
down. 

Some  industries  are  intermittent,  run  full  blast  at 
some  times,  on  part  time  or  part  force  at  others,  and  not 
at  all  at  still  other  times.  The  community  where  such 
industries  exist  is  a  hard  one  for  the  retail  distributor 
under  almost  any  circumstances.  Many  unthinking  peo- 
ple rush  into  the  retail  business  during  the  more  rushing 
times,  compete  keenly  for  trade,  and  find  themselves 
stranded  when  the  lean  seasons  approach.  The  rush  sea- 
sons are  likely  to  find  the  dealer  with  depleted  stocks, 
while  the  dull  seasons  are  quite  sure  to  find  the  dealer 
with  large  quantities  of  unsold  goods. 


12  Retail  Store  Management 

Conditions  Affecting  Location 
location  of  retail  street 

The  retailer  who  wishes  to  study  his  business  will  not 
merely  inquire  how  many  and  what  classes  of  people 
pass  a  certain  location.  He  will  want  to  know  why  they 
pass  it.  This  introduces  a  very  interesting  bit  of  practical 
psychology.  Habit  rules  very  largely  in  making  some 
streets  and  certain  locations  most  popular.  But  definite 
reasons  can  usually  be  found  for  the  popularity  if  one 
goes  back  to  the  time  when  the  habit  was  only  in  the 
process  of  forming.  A  great  variety  of  conditions  tend 
to  help  make  a  location  popular,  and  only  a  few  of  them 
can  be  enumerated  at  this  place.  These  will  suggest  the 
line  of  thought  to  the  reader  so  that  he  can  study  his 
own  location  or  the  location  under  consideration. 

The  main  retail  street  in  almost  every  town  is  the  street 
that  most  shoppers  find  it  easiest  to  get  to,  or  at  least, 
at  one  time  found  it  easiest  to  trade  on.  This  principle 
prevails  everywhere.  Even  tlie  little  country  general 
merchandise  store  was  built  at  the  crossroads  where  peo- 
ple could  come  from  four  or  more  directions.  In  the 
village  and  city  the  retail  trade  street  is  the  one  on 
which  the  most  people  in  the  community  can  trade  with 
the  least  discomfort  or  inconvenience.  It  may  be  the 
level  street,  the  paved  street,  the  street  that  is  dry,  or 
the  street  that  is  most  easily  traveled. 

It  is  the  street  that  is  traversed  by  street  cars  in  all 
but  the  very  largest  and  most  crowded  cities.  It  is 
usually  down  town  rather  than  up  town  if  the  city  is 
built  on  a  slope.  It  is  not  necessarily  the  lowest  point  in 
the  city,  although  in  the  earliest  days  of  nearly  every  city 
the  lowest  point  that  was  dry  was  also  the  trading  point. 
In  nearly  all  our  American  inland  towns  built  on  river 


Retail  Store  Location  13 

banks,  the  earliest  business  street  was  the  street  facing 
the  river.  But  as  the  size  of  the  towns  increased,  and 
as  the  first  buildings  became  less  and  less  adapted  to 
carrying  on  the  trade,  the  main  business  section  moved 
up  block  after  block  from  the  river.  This  movement  up 
and  away  from  the  river  may  be  noted  in  nearly  every 
old  river  town. 

SIDE  OF  STREET 

One  side  of  the  street  is  usually  more  popular  than 
the  other.  There  may  be  several  causes  for  this.  If 
the  street  is  not  level,  the  upper  side  is  usually  better 
traveled  than  the  lower.  In  all  parts  of  this  country, 
except,  perhaps,  the  most  northern  tier  of  states,  the 
shady  sides  of  the  street  during  the  afternoon  are  most 
popular.  The  largest  part  of  the  trade  is  done  during 
the  afternoon,  and  the  shoppers  coming  and  going  to 
the  stores  seek  the  shady  sides  of  the  street;  conse- 
quently the  stores  located  on  the  shady  sides  draw  trade 
with  less  effort  on  their  part  than  the  stores  on  the  sunny 
side.  In  the  most  northern  part  of  the  country,  during 
the  winter  months  of  the  year  at  least,  the  sunshine  is 
so  much  welcomed  by  walkers  that  they  take  the  sunny 
sides.  In  winter  and  during  wet  weather  the  sunny  sides 
usually  dry  off  more  quickly  than  the  shady  sides,  and 
this  helps  to  make  the  sunny  sides  more  desirable. 

SUNLIGHT  AND  WINDS 

The  sunlight  is  a  very  important  factor  to  be  con- 
sidored  in  locating  a  retail  store.  Not  only  do  the  people 
seek  the  protection  of  the  shady  side  from  its  direct  rays 
or  seek  its  warmth  ami  brightness  according  to  the  lati- 
tude, but  it  afYects  the  displays  that  the  store  makes  in 
its  windows.    It  is  much  more  difficult  to  make  a  satis- 


14  Retail  Store  Management 

factory  display  of  most  lines  of  merchandise  in  sunny 
windows  than  in  windows  in  which  the  light  is  controlled 
or  shaded.  A  bright  glare  from  the  outside  makes  a 
mirror  of  the  window  glass  if  the  merchandise  and  back- 
ground are  dark  colored,  thus  preventing  the  goods  from 
being  seen  at  all.  Very  few  goods  can  be  displayed  for 
any  length  of  time  in  the  direct  light  of  the  sun  without 
damage  to  color  or  finish.  Shades  or  awnings  are  re- 
quired on  the  sunny  side  to  protect  the  merchandise  in 
the  ^\indows,  but  this  protection  interferes  with  the  ready 
sight  of  the  goods  within.  Thus  on  the  shady  side  of  the 
street  the  most  attractive  displays  can  be  made,  and  these 
help  to  draw  the  crowd  to  this  side  of  the  street.  Awnings 
are  a  nuisance  at  the  best,  interfering  not  only  with  the 
efficiency  of  the  show  windows  but  also  with  passers-by 
with  parasols  and  umbrellas. 

The  prevailing  mnds  affect  a  location.  People  natu- 
rally avoid  corners  or  sides  of  streets  that  are  wind  swept 
much  of  the  time,  particularly  if  the  wind  is  cold  and 
raw,  or  if  dust-laden.  The  side  sheltered  from  the  wind 
is  obviously  the  popular  side. 

ENVIRONMENT 

A  street  with  a  sidewalk  on  one  side  in  good  condition, 
clean,  level,  pleasant  to  walk  upon,  and  with  an  ugly 
sidewalk  on  the  other  side,  uneven,  unclean,  on  which 
pools  of  water  stand  after  showers,  etc.,  will  find  most 
of  its  traffic  on  the  side  having  the  best  walk  regardless 
of  other  conditions.  Sunlight,  wind,  and  the  slope  of 
the  land  operate  most  fully  only  when  both  sides  of  the 
street  are  otherwise  quite  alike. 

People  naturally  take  the  side  of  the  street  that  is 
most  pleasant.  If  one  side  has  a  number  of  old,  empty, 
tumble-dowTi    structures,  Imiklings,  billboards,  or  other 


Retail  Store  Location  15 

features  that  are  not  attractive  in  themselves,  people  will 
take  the  other  side  of  the  street  if  that  appears  more 
attractive.  Most  people,  especially  women,  avoid  smoke, 
noise,  bad  odors,  etc.,  and  if  one  side  of  the  street  is  more 
pleasant  in  any  of  these  particulars  than  the  other,  it  will 
receive  the  preference  of  the  passing  crowds.  Beautiful, 
clean,  new  architecture  attracts  people,  and  a  location 
near  structures  of  this  kind  is  generally  considered  good. 

People  go  where  the  crowds  go.  The  stores  that  have 
already  located  in  good  places  draw  ever  larger  and 
larger  crowds.  Consequently  places  near  old,  successful 
stores  are  to  be  preferred.  The  syndicate  five  and  ten 
cent  stores  try  to  get  a  location  when  opening  up  in  a 
new  town  close  to  the  best  department  store  whenever 
possible.  A  large  wholesale  house  that  supplies  goods 
for  variety  stores  advises  its  customers  through  its 
service  bureau  to  locate  next  door  if  possible  to  a  well- 
established  five  and  ten  cent  store  or  near  a  good  depart- 
ment store. 

Some  stores  go  well  together  in  groups  Their  compe- 
tition is  not  so  strong  as  their  assistance  to  each  other. 
For  example,  shoe  stores,  specialty  ready-to-wear  goods, 
jewelry,  and  diy  goods  complement  each  other  in  getting 
the  trade  of  women.  Hardware,  house  furnishings,  and 
furniture  stores  go  well  together.  Confectioneries,  flo- 
rists, and  ice  cream  parlors  go  well  together.  A  location 
near  a  successful  moving  picture  theatre  is  splendid  for 
stores  dealing  in  women's  and  children's  goods  and  is 
not  bad  for  stores  or  shops  dealing  in  men's  goods.  The 
moving  picture  show  brings  out  the  people,  and  when 
they  come  out  to  see  the  movies,  they  usually  have  time 
to  stop  and  see  the  dispbiys  in  nenrby  wiinlows  and  to 
shop  in  the  stores. 

Saloons,   blacksmith    shops,   factories,   and    boarding 


l(i  Retail  /Store  Management 

houses  when  near  to  the  stores  generally  hurt  the  trade 
in  women's  goods.  Hospitals  and  schools  as  well  as 
jails  also  are  considered  bad,  and  large  empty  buildings 
are  bad  competitors  for  any  kind  of  store. 

INFLUENCE  OF  HABIT 

People  get  into  the  habit  of  going  in  certain  directions, 
taking  certain  streets  and  certain  sides  of  the  streets 
because  of  repeating  an  act  that  at  first  seems  reasonable 
to  them.  These  habits  help  certain  locations  to  be  sure, 
but  they  also  hurt  all  other  locations  out  of  the  beaten 
path.  The  man  who  would  locate  his  store  out  of  the 
district  where  people  would  habitually  come  to  trade 
not  only  must  contend  with  the  extra  exertion  demanded 
of  customers  to  come  to  his  out-of-the-way  place,  but 
also  must  contend  with  habit  in  human  nature.  Of  the 
two,  among  most  people,  habit  is  perhaps  the  stronger. 

RETAIL   RENTALS 

A  location  for  a  retail  store  is  valuable  in  proportion 
as  it  offers  an  opportunity  to  sell  goods  and  to  make  a 
profit  from  the  sales.  Since  profits  may  be  made  either 
by  adding  large  margins  to  the  costs  or  by  turning  the 
stock  often  on  narrower  margins,  it  is  the  possibility 
of  making  large  profit  sales  or  many  sales  that  gives  a 
store  place  a  high  value.  High  rent  does  not  necessarily 
add  to  the  cost  of  sales,  provided  the  volume  of  sales 
increases  proportionately. 

In  a  small  village  whtere  the  population  is  small  and 
the  trade  possibilities  meager,  -even  the  best  location 
may  not  be  worth  much  more  for  store  purposes  than 
for  residence  or  other  uses.  From  this  lower  limit  of, 
say,  $20  to  $30  per  front  foot,  the  values  of  the  best 
retail  locations  increase  more  than  a  thousand  times 


Retail  Store  Lpcation  17 

this  amount  in  the  largest  cities.  The  larger  the  city 
and  the  larger  the  possibilities  of  making  profits  in  either 
of  the  ways  indicated  above,  the  higher  the  values  of 
the  location. 

In  small  towns  the  improvements,  that  is  the  building, 
are  usually  worth  as  much  or  more  than  the  lot.  In  the 
largest  cities,  on  the  best  sites,  the  lots  are  worth  more 
than  the  buildings.  It  would  not  be  profitable  to  expend 
as  much  money  upon  the  building  as  must  be  expended 
for  the  land.  On  the  average,  however,  the  improve- 
ments on  a  site  suited  for  retailing  are  about  equal  to  the 
value  of  the  lot.  Not  only  is  this  an  average,  but  it  also 
makes  a  fairly  safe  rule  of  investment  for  those  wanting 
to  build  a  retail  store  on  a  lot  suited  for  the  purpose. 

Since  it  is  the  possibility  of  making  sales  and  profits 
that  gives  value  to  a  retail  location,  the  value  and  the 
income  in  the  form  of  rent  that  the  location  commands 
bear  a  close  relationship  to  the  earnings  of  the  business 
conducted  thereon.  While  sales  totals  do  not  give  any 
accurate  idea  of  the  amount  of  net  profits,  still  the  sales 
total  is  generally  used  as  the  measure  of  the  rent.  The 
amount  of  the  rent  that  must  be  paid  for  location  and 
building  varies  for  different  places  and  for  different  busi- 
nesses ]>ut  ranges  from  y^  per  cent  up  to  15  per  cent  of 
the  sales  in  successful  businesses.  The  average  rental  in 
small  towns  or  villages  seems  to  range  from  1  per  cent  to 
2  per  cent  of  the  sales.  In  cities  of  25,000  up  to  100,000 
the  averago  goes  up  at  least  1  per  cent;  while  in  cities 
above  100,000  the  average  rental  for  good  locations  runs 
from  3  per  cent  to  5  per  cent  or  even  6  per  cent  of  sales. 
Specialty  stores  located  in  exceptionally  good  locations, 
and  thus  enabled  to  make  large  profits  per  sale,  must  in 
most  cases  pay  rentals  far  above  the  averages  just  given. 
One  of  the  elements  of  success  in  such  high-priced  loca- 


18 


Retail  Store  Management 


Passers-by 


Factors  in 

Retail  Store 

Location 


Buying  power 
of  people 


Customs  of  people 


Character  of 
local  industries 


Street  location 


Side  of  street 


Store  environment 


v 


Rentals 


Back  and  forth  to  work — 

specialized  stores 
Shopping  hours — general 

and  department  stores 
Amusement  crowds — 

specialized  stores 


Occupations — skilled  or 

unskilled  labor 
Family  incomes 
Percentages  expended  for 

various  classes  of  goods 
Will  the  community  support 

such  a  store? 


Religious  customs 
Racial  characteristics 
Cultural  distinctions 
Conservatism  of  people 


Permanent 

Temporary 

Transitional 

Intermittent 

School  and  tourist  towns 


Retail  street 

Accessibility 

Street  car  streets 

Level  street 

Paved  street 

Down-town  or  up-town 

Direction  of  growth  of  city 


{ 


Upper  side  or  lower  side 
Shady  or  sunny  side — winter 

and  summer 
Prevailing  winds 


i  Sidewalks 
Types  of  buildings 
Empty  buildings 
Kinds  of  business 
establishments 
Existing  stores 
Cotnpiementary  groups  of 
stores 
Hab'its 

f  Amount 
<  Terms 
\Best  merchants 


Fic.  1. — Factors  in  Retail  Store  Location 


Retail  Store  Location  19 

tions  consists  in  the  ability  to  drive  a  good  real  estate  or 
rental  bargain  for  the  site. 

Best  Retailers  Tend  To  Get  Best  Locations 

A  retail  store  location  is  simply  an  opportunity  to  go 
to  work.  A  good  location  is  one  that  can  be  worked  more 
intensively  than  a  poor  one.  The  better  the  location  the 
more  intensive  the  means  of  merchandising  that  should 
be  employed,  in  fact,  must  be  employed.  Only  the 
shrewdest  and  brainiest  retail  store  managers  can  suc- 
cessfully conduct  stores  in  the  best  locations.  In  the 
long  run  the  best  locations  tend  to  get  into  the  hands  of, 
and  be  managed  by,  the  strongest  type  oi  retail  man- 
agers. The  competition  among  managers  for  such 
locations  is  nearly  always  keen.  The  ratio  of  rentals 
to  sales  is  therefore  higher  than  in  poorer  locations,  and 
only  the  most  skillful  can  pay  the  rents  and  other 
expenses  incident  to  such  locations  and  still  make  a  net 
profit. 

A  summary  of  the  factors  to  be  considered  in  retail 
store  location  is  given  in  Figure  1.  The  tests  called  for 
are  only  suggestive,  but  they  may  well  be  used  by  a 
merchant  or  anyone  contemplating  the  buying  of  a  store 
for  determining  the  efficiency  of  the  location.  A  given 
store  site  will  seldom  combine  the  highest  advantages  in 
all  the  points  outlined;  consequently  a  sort  of  average  or 
composite  value  must  be  assigned  to  the  place.  The  sum 
of  these  values  can  never,  however,  give  a  correct  result 
unless  the  parts  are  first  accurately  weighed  and  deter- 
mined. 

The  number  of  failures  which  result  from  poor  location 
and  too  high  rents  is  large.  Such  a  location  may  permit 
satisfactory  business  for  a  time,  but  it  offers  a  constant 
invitation  for  new  competition  at  the  better  location,  and 


20  Retail  Store  Management 

when  such  competition  has  once  begun  under  able  man- 
agement, it  places  the  store  at  the  poor  location  at  an 
unequal  disadvantage,  and,  if  the  difference  is  great 
enough,  failure  is  the  only  outcome. 

TEST  QUESTIONS 

1.  Compared  with  the  other  factors  in  successful  retail  store 
management,  what  is  the  relative  importance  of  location  ? 

2.  What  facts  should  be  ascertained  in  regard  to  passers-by? 

3.  How  can  the  buying  power  of  the  people  in  a  community  be 
analyzed  as  a  guide  to  store  location  and  management? 

4.  AYhat  are  some  of  the  customs  of  people  which  must  be  reck- 
oned with  in  deciding  upon  the  store  and  its  location  ? 

5.  What  analysis  of  the  local  industries  should  be  made  pre- 
vious to  locating  in  a  commimity  ? 

6.  What  factors  determine  the  location  and  shifting  of  retail 
streets  ? 

7.  What  factors  often  give  one  side  of  a  street  a  preference 
over  another  ? 

8.  What  general  principles  should  be  observed  in  retail  store 
location  with  regard  to  rentals? 


CHAPTER  in 
buying  a  business 

Fitness  for  Retailing 

It  has  been  a  current  opinion  that  ' '  anybody  can  keep 
store."  That  experience,  education,  and  natural  fitness 
are  necessary  requirements  is  coming  to  be  seen  slowly 
but  surely.  Because  many,  if  not  most,  people  still 
believe  in  the  old  maxim,  the  failure  rate  among  retailers 
is  still  far  too  high.  The  time  may  come,  even  in  this 
country,  when  the  public,  in  the  interest  of  conservation 
and  in  the  interest  of  the  general  welfare,  will  place 
restrictions  upon  entering  into  the  retail  business  as  is 
now  done  for  the  professions,  banking,  insurance,  trans- 
portation, and  some  other  callings. 

Space  cannot  be  taken  here  to  go  into  a  discussion  of 
tliis  idea,  but  it  must  be  said  that  the  time  has  come  for 
calling  attention  to  the  social  waste  of  having  a  great 
number  of  inexperienced,  unfit  persons  enter  retailing 
each  year,  only  to  exhaust  their  own  small  capital  and 
upset  the  conditions  of  trade  for  their  fellow  merchants 
who  may  have  much  greater  fitness  for  their  work  but 
who  must  boar  the  cost  of  competition  with  concerns 
destined  to  fail.  It  is  the  loss  to  the  community  of 
wasted  effort  and  capital  as  well  as  the  loss  to  tlie  indi- 
viduals who  try  and  fail  that  needs  to  be  understood  by 
every  thinking  citizen  as  well  as  by  retailors  themselves. 

Let  us  assume  that  an  individual  seeking  to  start  a 

21 


22  Retail  Store  Management 

retail  store  has  the  necessary  qualifications  of  experience, 
education,  willingness  to  work  as  only  managers  have  to 
work  in  the  early  days  of  getting  their  businesses  on  their 
feet,  and  the  personal  qualities  that  fit  a  man  for  the 
management  of  a  retail  store.  Let  us  also  assume  that 
the  individual  has  the  necessary  amount  of  capital,  an 
amount  that  cannot  be  defined  because  it  must  neces- 
sarily differ  with  the  kind  of  business,  the  size  of  the 
community,  the  class  of  trade  sought,  the  location 
selected,  and,  most  of  all,  with  the  man,  himself.  What, 
then,  are  some  of  the  considerations  that  he  should  bear 
in  mind  in  acquiring  a  store? 

Choosing  the  Location 

The  first  thing  needed  is  an  analysis  of  the  location 
as  indicated  in  the  last  chapter.  It  is  necessary  to  know 
whether  the  store  to  be  bought  is  in  a  location  frequented 
by  many  or  most  of  the  people  in  the  community,  what 
brings  the  people  there,  and  what  are  the  possibilities  of 
gaining  their  patronage.  One  must  ask  the  question 
whether  the  community  will  support  a  store  such  as  that 
under  consideration.  In  small  communities  this  question 
may  call  for  an  enumeration  of  the  possible  customers. 
In  larger  communities  it  may  refer  to  the  amount  and 
kind  of  competition.  Many  a  failure  of  a  retail  business 
can  be  traced  to  the  fact  that  there  was  no  need,  either 
active  or  potential,  for  the  kind  of  store  started;  that 
there  was  not  sufficient  demand  for  the  class  of  goods 
handled ;  or  that  the  demand  was  adequately  supplied  in 
a  satisfactory  way  by  other  stores  already  in  existence. 

Presence  of  competition  should,  of  course,  not  be  con- 
sidered in  itself  alone  as  a  sufficient  reason  for  not 
starting  a  store.  The  fundamental  questions  to  be 
answered  in  every  case  are  these:    Is  this  store  now 


Buying  a  Business  23 

under  consideration  needed  by  tlie  public?  Will  it  be 
wanted  by  the  people?  If  the  answers  to  these  questions 
are  given  in  the  affirmative,  then  the  amount  of  competi- 
tion need  not  be  considered.  If  the  new  store  can  supply 
wants  not  supplied  by  others,  if  the  new  store  can  supply 
wants  more  adequately,  more  satisfactorily,  and  more 
economically  than  the  old  stores,  then  there  is  excellent 
reason  for  its  being  started,  and  the  chances  for  its 
success  are  good. 

When  buying  a  store  in  any  location  attention  needs 
to  be  given  to  the  development  of  the  city,  its  directions 
of  growth,  and  its  probable  future,  so  far  as  possible. 
It  may  be  difficult  to  judge  the  probable  future  of  a  city, 
but  one  can  at  least  note  the  progress  during  the  imme- 
diate past  and  any  possible  influences  affecting  this 
progress. 

Analysis  of  the  Business  To  Be  Bought 

Coming  more  particularly  to  the  concern  itself,  the 
investigation  needs  to  include  not  only  the  business  as 
it  is  but  also  its  past  history.  A  location  with  a  bad 
past,  such  as  failure  after  failure,  is  generally  considered 
a  bad  purchase  at  any  price.  The  public  seems  to  be  shy 
of  the  place  with  a  history  of  failures.  To  be  sure,  a 
failure  may  be  due  to  any  one  of  three  classes  of  causes, 
the  wrong  management,  untoward  circumstances  nuiking 
the  time  unpropitious  for  starting  a  business,  or  unsuit- 
ability  of  location.  But  if  there  have  been  repeated 
failures,  one  may  presume  a  strong  likelihood  that  the 
location  is  not  all  that  it  might  be  for  the  kind  of  store 
that  was  attempted.  There  are  even  objections  to  going 
into  business  in  a  location  whore  there  has  been  but  one 
failure  if  the  failure  be  recent.  There  is  an  old  maxim 
that  runs  somewhat  as  follows:    **It  is  easier  to  start  a 


24  Retail  Store  Management 

new  business  than  it  is  to  raise  a  dead  one."  Certainly 
if  the  failure  has  been  one  of  long  development,  there  will 
be  considerable  work  to  do  before  the  habits  of  customers 
will  be  changed  from  staying  away  to  coming  to  the  store. 
It  is  easier  to  cause  a  new  habit  where  none  have  existed 
before  than  to  seek  to  build  by  first  breaking  down  old 
habits. 

Much  valuable  information  can  usually  be  gained  by 
making  specific  inquiry  as  to  why  the  present  owner 
wants  to  sell  out,  what  the  conditions  were  that  he  found 
difficult  to  contend  with,  and  so  on.  For  answers  to  these 
questions  the  buyer  of  the  business  should  consult,  not 
only  the  person  or  persons  selling,  but  also  other  people 
in  the  community,  such  as  competitors,  bankers,  and  cus- 
tomers. Such  inquiries  should  also  seek  to  determine 
what  the  character  of  the  merchant  was  as  a  merchant. 
The  replies  will  generally  reveal  the  elements  of  success 
and  of  failure  in  the  past  business.  It  is  just  these  things 
that  the  new  manager  needs  to  know  in  order  to  profit 
by  past  experience. 

The  sale  of  a  retail  business  usually  includes  not  only 
the  real  estate,  buildings,  and  so  on,  or  the  leasehold  for 
the  unexpired  term  of  years,  but  also  the  fixtures,  a  cer- 
tain amount  of  merchandise  in  stock,  and  in  some  cases 
goodwill  is  figured  as  an  item  in  the  sale. 

Purchasing  Real  Estate  v.  Retail  Business 

In  an  outright  purchase  of  the  real  estate  the  ordinary 
precautions  of  buying  land  need  to  be  observed,  as  to 
clear  titles,  bona  fide  transfer,  accurate  descriptions,  etc. 
In  the  purchase  of  a  lease  for  its  unexpired  term,  care 
needs  to  be  exercised  to  make  sure  that  the  terms  of  the 
lease  are  fully  understood,  the  conditions,  if  any,  the 
provisions  for  revaluation,  and  the  chances  of  obtaining 


Buying  a  Business  25 

a  pew  lease  at  the  expiration  of  the  one  under  considera- 
tion. In  handling  either  real  estate  or  leases  the  best 
plan  is  to  secure  the  help  of  a  competent  attorney  to  make 
sure  that  all  documents  are  properly  made  out  and 
recorded. 

In  passing  it  should  be  added  that  buying  and  owning 
real  estate,  even  if  it  be  only  of  store  property,  is  a  busi- 
ness entirely  apart  from  retailing  and  should  be  kept 
separate  from  the  store  business  in  the  owTier's  accounts. 
The  retail  business  should  be  required  to  jjay  a  rental  of 
fair  market  rate  for  the  use  of  the  store  building  and 
location ;  and  the  upkeep  of  the  building,  the  taxes,  insur- 
ance, and  other  items  of  expense  on  the  building  should 
be  met  from  the  building's  income.  By  keeping  the 
accounts  separate  the  owner  may  be  able  to  determine 
after  a  period  of  time  which  part  of  his  double  venture  is 
the  more  profitable;  whereas  if  both  were  lumped 
together,  he  would  have  to  guess  at  the  actual  state  of 
affairs. 

Purchasing  Fixtures  and  Inventories 

The  purchaser  of  a  store  and  its  stock  should  always 
insist  on  having  a  complete  inventory  of  both  fixtures  and 
merchandise.  In  valuing  these,  the  kind,  the  amount, 
and  the  condition  should  be  carefully  noted.  Valuations 
should  bo  made  upon  the  basis  of  present  worth  rather 
than  original  costs.  The  value  of  fixtures  will  depend 
upon  their  fitness  for  the  new  business. 

On  inventorying  the  merchandise  stock  of  an  old  store, 
one  commonly  finds  considerable  stock  that  is  of  little 
value,  goods  fliaf  are  out  of  fashion,  incomplete  lines 
that  cannot  bo  completed,  because  their  manufacture  has 
ceased,  odd  and  rarely  wanted  sizes,  tarnished,  soiled,  and 
shopworn  goods,  etc.     Some  of  these  goods  may,  per- 


26  Retail  Store  Management 

haps,  not  be  sold  at  any  price.  Some  may  be  sold  only 
at  much  less  than  cost.  Other  items  may  have  but  small 
value  in  themselves  but  may  be  necessary  for  the  store 
to  have  in  stock  to  complete  certain  lines  and,  conse- 
quently, be  worth  nearly  full  value  as  new.  Many 
conditions  affect  the  values  of  goods  in  stock  in  stores  in 
addition  to  the  usual  depreciation  with  time,  and  all  these 
need  to  be  understood  in  making  a  valuation  for  purposes 
of  purchase.  A  novice's  ideas  of  value  are  not  likely  to 
be  worth  much  in  this  work.  The  experienced  judgment 
of  an  expert  merchandiser  is  necessary,  and  not  only 
those  who  have  had  but  little  experience  in  merchandis- 
ing, but  also  those  who  have  made  life  studies  of  retailing, 
should  employ  experts  to  assist  in  making  valuations,  if 
for  no  other  purpose  than  to  check  the  judgment  of  the 
purchaser.  This  is  a  case  where  two  or  more  heads  are 
better  than  one. 

Buying  Credits 

If  the  concern  to  be  bought  out  has  been  doing  a  credit 
business,  the  purchase  may  involve  taking  over  the 
accounts  due  or  receivable.  Much  care  needs  to  be  exer- 
cised in  estimating  the  value  of  this  item.  At  no  place 
is  the  method  of  lumping  all  together  without  classifica- 
tion more  fatal  than  in  valuing  the  outstanding  sums 
due  the  concern.  In  a  normal,  going  business,  some  of 
the  accounts  will  be  found  good  in  every  way,  the  debtors 
standing  ready  to  pay  their  debts  at  the  usual  times,  or 
whenever  they  are  due.  Others  are  equally  good  but  need 
collection  service  in  the  form  of  statements  and,  in  some 
cases,  dunning  letters  and  follow-up.  Others  will  need 
to  be  seen  personally  by  a  collector  before  the  amounts 
can  be  collected.  Still  others  will  not  pay  until  forced 
to  do  so  by  legal  action.    Still  others  will  never  pay,  and 


Buying  a  Business  27 

some  cannot  pay,  no  matter  what  pressure  is  brought  to 
bear  upon  them.  Long  standing  accounts  are,  as  a  rule, 
more  troublesome  to  collect  than  recently  incurred  debts. 
The  purchaser  of  accounts  receivable  should  examine, 
and  upon  the  best  information  available,  classify  them 
into  at  least  two  classes,  ''good"  and  "doubtful."  Some- 
times a  third  classification  into  "bad"  accounts  is 
necessary.  The  "good  accounts"  may  be  accepted  at 
practically  their  face  value,  less  interest  for  the  time 
until  they  fall  due,  possible  expenses,  and  a  certain 
amount  thought  to  represent  the  probable  loss  by  unfore- 
seen accidents  among  the  debtors,  and  to  cover  mistaken 
judgment  as  to  whether  the  debtors  are  "good"  or  not. 
No  rule  can  be  made  for  discounting  the  value  of  "doubt- 
ful accounts."  "Bad"  accounts  have  no  purchase  value. 
The  judgment  of  someone  knowing  the  local  conditions 
intimately  should  be  sought.  Credit  men  of  wholesale 
houses  doing  much  business  in  the  vicinity  are,  perhaps, 
better  fitted  to  make  safe  estimates  than  anyone  else. 

Ownership  Tests 

"Wlion  stock  has  been  taken  and  its  value  placed,  the 
next  step  in  the  investigation  is  to  determine  its  owner- 
ship, whether  fully  paid  for  or  not,  if  bought  on  the 
installment  plan,  or  if  owned  by  other  parties  and  merely 
consigned  to  the  dealer  who  is  selling  out.  Care  should 
be  taken  to  determine  whether  there  are  any  outstanding 
indebtednesses  secured  by  chattel  mortgages  on  the  fix- 
tures or  stock.  Finally,  the  purchase  should  be  closed  by 
getting  a  bill  of  sale  in  writing,  drawn  up  by  an  attorney. 
A  formal  bill  of  sale  is  given  in  Figure  2.  Any  other 
wording  wliich  clearly  embodies  the  terras  of  sale  will 
answer  the  same  purpose.  The  schedule  may  be  raade 
out  oTi  scparato  sheets  and  attaclied  to  the  bill  of  sale. 


BILL  OF  SALE 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  William  Stonp, 
of  the  city  of  Chicago,  in  the  county  of  Cook  and  state  of  Illinois, 
party  of  the  first  part,  for  anil  in  consideration  of  the  sum  of  One 
Tliousand  Dollars,  lawful  money  of  tlie  United  States  of  America,  to 
him  in  hand  paid,  at  or  before  the  ensealing  and  delivery  of  these 
Presents  (or  specify  any  other  manner  of  payment),  by  Richard  Lake, 
party  of  the  second  part,  the  receipt  whereof  is  hereby  acknowledged, 
has  granted,  bargained,  sold,  and  delivered,  and,  by  these  Presents, 
does  grant,  bargain,  sell,  and  deliver,  unto  the  said  party  of  the  sec- 
ond part,  all  the  following  GOODS,  CHATTELS,  and  PROPERTY, 
to  wit:  All  and  singularly  the  goods  and  stocks  of  goods  and  mer- 
chandise now  in  the  store  of  the  party  of  the  first  part,  at  No 

Street,  in  the  city  of ,  and  all  the  furniture  and 

movable  fixtures  in  said  store  belonging  to  the  party  of  the  first  part, 
a  schedule  of  which  is  annexed  hereto. 

TO  HAVE  AND  TO  HOLD  the  said  goods,  chattels,  and  property 
unto  the  said  party  of  the  second  part,  his  heirs,  executors,  admin- 
istrators, and  assigns,  to  and  for  his  own  proper  use  and  behoof, 
forever. 

And  the  said  party  of  the  first  part  does  vouch  himself  to  be  the 
true  and  lawful  owner  of  the  said  goods,  chattels,  and  property, 
and  to  have  in  himself  full  power,  good  right,  and  lawful  authority, 
to  dispose  of  the  said  goods,  chattels,  and  property,  in  manner,  as 
aforesaid:  And  he  does,  for  himself,  his  heirs,  executors,  and  ad- 
ministrators, covenant  and  agree  to  and  with  the  said  party  of  the 
second  part,  to  Warrant  and  Defend  the  said  goods,  chattels,  and 
property  to  the  said  party  of  the  second  part,  his  heirs,  executors, 
administrators,  and  assigns  against  the  lawful  claims  and  demands 
of  all  and  every  person  and  persons  whomsoever. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  and  seal 
the  fifteenth  day  of  October  in  the  year  one  thousand  nine  hundred 
and  sixteen. 

Signed,  Sealed,  and  Delivered 
in  the  Presence  of 

(Signed)  William  Stone  [seal] 
(Signed)  Sarah  Camp 

Schedule  of  the  goods  and  stocks  of  goods  and  merchandise  and 
the  furniture  and  movable  fixtures  mentioned  in  and  conveyed  by  the 
annexed  Bill  of  Sale: 

1 , 

2 ,  etc. 

Annexed  and  signed  this day  of ,  19. .. 

,  Witness 

Fio.  2.— Bill  of  Sale  with  Form  for  Schedule 


Buying  a  Business  29 

Buying  Goodwill 

the  nature  of  goodwill 

Goodwill  is  frequently  offered  as  a  valuable  consid- 
eration in  the  sale  of  a  retail  business.  In  so  far  as  it 
really  exists  it  is  one  of  the  best  assets  of  a  store.  The 
preliminary  investigation  of  a  business  needs  to  include 
a  thorough  study  to  determine  what  goodwill  the  business 
possesses.  Goodwill,  though  intangible,  is  a  very  real 
factor  in  everv  successful  business,  and  while  this  fact  is 
generally  understood,  it  does  not  seem  that  many  under- 
stand just  how  goodwill  arises,  of  what  it  consists,  and 
how  to  evaluate  it. 

** Goodwill"  may  be  defined  as  a  tendency  of  a  number 
of  people  of  a  community  to  come  to  the  particular  store 
under  consideration  rather  than  go  elsewhere.  It  origi- 
nates with  the  satisfaction  of  the  customer  with  the 
store's  service,  merchandise,  or  the  values  it  offers. 
Good  treatment,  courtesy,  and  attention  accorded  to  cus- 
tomers by  salespeople  are  powerful  builders  of  goodwill. 
Public  spiritedness  of  the  management  contributes 
largoly  to  the  tendency.  Continued  and  repeated  satis- 
faction with  the  store  leads  finally  to  a  habit  of  thought, 
a  belief,  or  a  faith  in  the  store.  It  is  this  faith  or  confi- 
dence in  the  store  built  on  the  recollections  of  satisfactory 
past  experiences  with  it  that  constitutes  the  cause  of  the 
tendency. 

The  satisfactory  service  contributing  to  the  building-up 
of  goodwill  in  the  customers'  minds  may  be  the  result  of 
carefully  planned  systematic  organization  and  team  work 
within  the  store;  but,  as  a  rule,  customers  select  some 
particular,  tangible  factor  about  the  store  to  which  their 
minds  attach  their  goodwill.  In  some  cases  the  goodwill 
inheres  in  the  location ;  in  others  it  is  attached  to  the 


30  Retail  Store  Management 

manager  or  proprietor  personally,  to  the  firm  name,  to 
the  salespeople,  or  to  some  particular  salesperson,  to  the 
brands  of  goods  sold,  to  any  particular  type  of  display 
or  method  of  selling,  and  so  on. 

Goodwill  that  inheres  in  the  location  remains  after  the 
business  changes  hands.  Goodwill  when  associated  in  the 
minds  of  the  customers  with  the  proprietor  or  manager 
goes  with  the  person.  If  he  leaves  the  business,  it  is 
lost  to  the  business.  If  a  manager  of  a  store  who  has 
attracted  considerable  goodwill  to  himself  should  open 
up  another  store  within  trading  distance  of  the  old  loca- 
tion relinquished  or  sold,  his  old  customers  would  carry 
their  trade  to  him.  For  this  reason,  in  buying  out  a 
store,  provisions  are  usually  made  in  the  contract  of 
purchase  that  the  seller  shall  not  again  engage  in  a 
similar  business  within  a  certain  number  of  miles,  for  a 
certain  period  of  years.  This  gives  the  buyer  a  chance 
to  gain  the  goodwill  of  the  same  group  of  customers. 

Goodwill  attached  to  the  firm  name  continues  with  the 
firm  as  long  as  the  name  is  kept;  hence  the  name  of  a 
concern  or  store  is  frequently  kept  even  after  the  prop- 
erty has  changed  hands.  Who  can  say  how  great  the 
loss  would  have  been  in  trade  and  prestige  if  the  store  of 
Marshall  Field  had  been  changed  in  name  after  the  death 
of  its  founder?  In  the  same  manner,  if  but  in  lesser 
degree,  other  stores  lose  trade  drawing  power  when  their 
names  are  changed,  because  the  name  is  to  many  people 
the  tangible  thing  to  which  they  attach  their  goodwill. 

Goodwill  associated  in  the  minds  of  the  customers  with 
some  salesperson  or  with  the  salespeople  of  a  store  is 
dependent  upon  the  salespeople.  If  they  go,  the  good- 
will goes.  Many  salespeople  are  able  to  build  up  a  large 
clientele  of  satisfied  customers  who  look  habitually  to 
them  for  their  goods.    Such  salespeople  are  worth  more 


Buying  a  Business  31 

and  can  command  more  salary  than  salespople  who  do 
not  have  the  knack  of  gaining  goodwill. 

That  salespeople  can  attract  a  large  part  of  the  good- 
will of  the  customers  of  the  store  to  themselves  is  recog- 
nized by  some  stores  as  an  evil,  and  the  attempt  is  made 
to  get  the  salespople  to  try  to  attract  the  goodwill  of 
the  customers  to  the  firm  or  the  location  rather  than  to 
themselves.  Salespeople  are  taught  to  speak  as  for  the 
firm  instead  of  for  themselves  in  dealing  with  their  cus- 
tomers; to  say,  "We  can  recommend  this,"  instead  of 
''I  can  recommend  this,"  and  so  on.  The  danger  in  con- 
nection with  goodwill  associated  with  the  salespeople  is 
that  the  salespeople  may  leave  and  become  employed  by 
competitors  or  that  they  may  go  into  business  for  them- 
selves, and  the  courts  have  held  that  they  have  the  right 
to  the  custom  of  their  former  customers.  On  the  other 
hand,  there  is  a  distinct  loss  in  personal  salesmanship 
when  the  salesman  effaces  himself  in  favor  of  his  firm 
before  his  customers.  Many  customers  naturally  prefer 
to  do  their  trading  with  an  individual  rather  than  with 
a  firm,  and  this  is  evidenced  by  the  fact  that  small  stores 
can  prosper  under  the  shadow  of  the  largest  institutions. 
In  the  small  institution,  the  personal  touch  is  most  impor- 
tant ;  while  in  the  large  place  it  is  the  name  of  the  concern, 
the  location,  and  other  factors  that  absorb  most  of  the 
goodwill. 

Goodwill,  in  a  few  cases,  extends  far  beyond  the  normal 
trading  territory  of  a  store.  The  name,  John  Wana- 
maker,  suggests  confidence  far  beyond  the  limits  reached 
by  the  store's  delivery  system.  In  ;act,  it  is  known  all 
over  the  continent,  but  the  value  of  the  goodwill  l)eyond 
the  trading  zone  is  largely  potential.  The  people  who  feel 
confidence  In  tliis  name  would  trade  at  the  Joim  Wana- 
makcr   store    it'    it   were   nearer.      Hence   this    goodwill 


32  Retail  Store  Management 

becomes  of  cash  productive  value  only  when  these  people 
move  into  the  trade  radius  of  the  store,  when  they  visit 
Philadelphia  or  New  York,  or  when  they  make  use  of  the 
mail-order  department. 

Another  characteristic  of  goodwill  is  that  after  a  period 
of  time  and  after  it  has  assumed  certain  proportions,  it 
grows  in  amount  and  intensity  almost  of  its  own  accord. 
Satisfied  customers  begin  to  tell  about  the  store  to  their 
friends,  to  take  sides  in  favor  of  it  in  arguments,  and  to 
bring  friends  and  acquaintances  to  see  the  store  that  they 
like.  Naturally  this  develops  goodwill  in  others  and  still 
others.  It  therefore  supplements  advertising  in  bringing 
in  new  trade  to  the  store,  and  it  is  noteworthy  that  a  large 
well-known  store  in  a  middle  western  city  that  possesses 
much  goodwill  has  been  able  to  keep  its  expense  for  adver- 
tising down  to  a  lower  percentage  of  its  sales  than  any 
of  its  competitors  having  less  of  this  prestige  among  its 
customers. 

In  other  stores  with  large  amounts  of  goodwill,  the 
advertising  appropriation  is  made  more  effective  by  the 
confidence  that  the  customers  place  in  it  as  a  result  of 
their  goodwill.  Larger  amounts  may  be  expended  for 
advertising  before  the  point  is  reached  wiiere  additional 
expenditures  do  not  bring  in  proportionally  greater 
amounts  of  business;  that  is  to  say,  before  the  point  of 
diminishing  returns  is  reached. 

It  will  be  seen  that  the  goodwill  of  a  retail  business  is 
measured  by  the  number  of  people  who  feel  that  the  given 
store  is  a  more  desirable  place  to  trade  for  anyone  or 
more  of  several  reasons  than  any  other  place.  If  there 
is  a  single  person  wl  -^  is  well  satisfied  with  the  store  and 
who  expresses  his  tavor  by  doing  his  trading  there 
because  he  wants  to  come,  the  store  may  be  said  to  possess 
80  much  goodwill.    The  goodwill  of  only  one  person  would 


Buying  a  Business  33 

in  most  cases  be  of  no  marketable  value  however.  But  the 
goodwill  of  a  hundred  people  possessing  considerable 
purchasing  power  would  be  a  highly  valuable  item  for 
any  store.  Some  of  the  largest  stores  possess  the  good- 
will of  literally  thousands  of  customers,  and  this  is  per- 
haps the  greatest  asset  they  have. 

Not  all  customers  who  trade  with  a  store  are  goodwill 
customers.  Some  may  come  because  they  cannot  go  else- 
where, others  because  there  may  be  too  much  incon- 
venience to  procure  their  merchandise  elsewhere.  The 
trade  of  a  customer  who  must  come  to  the  store  may  be 
worth  while  having  but  does  not  add  anything  to  the 
goodwill  of  the  store.  Just  as  soon  as  the  opportunity 
presents  itself  to  trade  elsewhere  such  customers  transfer 
their  entire  trade.  Illustrations  of  this  fact  might  be 
drawn  from  almost  every  community  where  there  was  at 
first  only  one  store  followed  by  the  addition  of  another 
and  the  consequent  loss  of  many  customers  at  the  old 
store.  Instances  have  been  known  where  people  who  have 
been  forced  to  trade  at  a  store  have  risen  in  a  body  and 
rebelled  against  buying  from  it.  Many  company  stores 
have  had  difficulties  of  this  kind  to  contend  with.  Good- 
will can  be  the  result  only  of  free  will.  In  so  far  as  cus- 
tomers would  still  continue  to  trade  at  the  store  after 
competition  sets  in,  goodwill  can  be  said  to  exist.  One 
must  carefully  discriminate  between  the  value  of  a  loca- 
tion as  a  convenient  point  of  trade  and  the  goodwill  of  a 
location. 

Customers  who  come  to  the  store  only  when  some  spe- 
cial sale  or  bargains  are  offered  but  who  do  not  give  their 
trade  regularly  to  the  store  can  hardly  be  said  to  con- 
tributo  to  the  store's  goodwill.  On  the  other  hand,  cus- 
tomers who  cannot  regularly  come  to  the  store  for  all 
their  supplies  of  tlie  kind  offered  by  the  store,  })ut  who 


34  Retail  Store  Management 

come  as  often  as  they  can  and  whenever  they  can,  are, 
definitely,  goodwill  customers.  Nearly  every  large,  suc- 
cessful store  and  many  small  stores  have  considerable 
goodwill  of  this  kind. 

Many,  if  not  most,  of  the  retail  concerns  offered  for 
sale,  with  a  few  exceptions,  have  but  little  real  goodwill 
among  their  assets.  The  business  that  has  been  under- 
going a  long  period  of  decay  has  no  goodwill  of  value. 
The  mismanaged  business  is  likely  to  be  without  goodwill. 
The  dishonest  business  is  likewise  devoid  of  it.  Goodwill 
is  like  a  delicate  plant.  It  is  hard  to  get  it  started  and 
requires  great  care  to  make  it  grow.  It  is  easy  to  harm 
it  or  destroy  it  altogether. 

VALUATION  OF  GOODWILL 

The  actual  valuation  of  goodwill  is  an  exceedingly  com- 
plex problem  as  the  foregoing  discussion  indicates.  In 
the  last  analysis  the  amount  to  be  allowed  is  determined 
by  the  bargaining  power  of  buyer  and  seller.  The  only 
practical  mathematical  formula  for  the  valuation  of  good- 
will is  that  which  capitalizes  the  net  income  of  the  busi- 
ness above  the  normal  rate  of  interest  on  the  capital 
invested.  Let  us  assume  that  the  average  net  capital 
invested  in  a  store  is  $10,000  and  that  the  normal  return 
should  be  8  per  cent.  Let  us  furthermore  assume  that  the 
net  profits  for  the  year  on  this  business,  after  allowing 
for  all  expenses,  including  wages,  are  $1,000.  The  normal 
rate  of  return  at  8  per  cent  on  $10,000  would  be  $800. 
$1,000  minus  $800  leaves  $200,  which  may  be  considered 
the  income  return  of  the  goodwill.  This  capitalized  at 
8  per  cent  makes  the  goodwill  worth  $2,500. 

The  foregoing  calculation  determines  the  valuation  of 
the  goodwill  of  the  store  on  the  basis  of  current  earnings. 
If  we  introduce  the  element  of  expected  increase  in  profits, 


Buying  a  Business  35 

tlie  goodwill  may  be  worth  even  more.  A  good  margin 
should  always  be  allowed,  however,  when  goodwill  is  val- 
uated  on  such  a  mathematical  basis.  In  the  last  analysis, 
good  judgment  based  on  a  thorough  understanding  of  all 
the  merchandising  factors  involved  will  prove  a  safer 
guide. 

Discounting  Illwill 

There  exists  also  the  negative  of  good^^ill.  We  may, 
perhaps,  term  it  "illwill."  If  customers  have  been  mis- 
led by  the  store's  advertising,  if  the  merchandise  has  been 
unsatisfactory,  if  there  has  been  short  weight  or  measure, 
if  the  service  has  been  unsatisfactory,  if  the  salespeople 
have  been  rude,  inattentive,  or  overanxious  to  sell,  then 
customers  are  likely  to  entertain  nothing  but  illwill  for 
the  store.  Under  such  circumstances  customers  will  delib- 
erately shun  a  store  and  seek,  so  far  as  possible,  to  give 
their  trade  to  other  stores.  Illwill  is  just  as  real  as  good- 
will, and  its  effect  is  to  subtract  from  the  value  of  the 
business  just  as  goodwill  adds  to  it.  The  buyer  of  a 
store  must  beware  that  he  is  not  acquiring  illwill  along 
with  the  location,  firm  name,  and  other  effects  of  the 
concern. 

From  what  has  been  said  it  is  evident  that  goodwill 
embraces  the  established  popularity  of  a  business  house 
which  tends  to  maintain  its  custom.  It  represents  the 
value  of  a  business  over  and  above  the  stock  in  trade. 
This  plus  value  has  been  secured  by  the  expenditure  of 
money  for  advertising,  high-class  clerks  and  good  service ; 
by  a  somewhat  continual  policy  of  square  dealing,  honesty 
and  satisfaction ;  or  by  special  advantages  accruing  from 
such  a  factor  as  location. 

A  summary  of  the  factors  to  bo  considorod  in  buWng  a 
business  is  shown  in  the  chart,  Figure  3. 


36 


Retail  Store  Management 


Fitness,  for  retailing 
Choosing  locations 

Buying  real  estate 


Buying 

a     < 
Business 


Buying  a  lease 


Buying  fixtures 


Buying  stock 


Buying  credits 


Buying  goodwill 


^^  Ownership  tests 


Experience 
Education 

Willingness  to  work 
Personal  qualities 
t  Necessary  capital 

See  Chapter  II,  Fig.  1 


I  Clear  title 
Bona  fide  transfer 
Accurate  description 
Suitableness 
Proper  valuation 
Cost  of  upkeep 
Separate  accounts  with  real 
estate 

Terms  fully  understood 
Conditions 
Revaluation 
Provisions  for  renewal 

Complete  inventory 
Fitness  for  new  business 
Value 

Present  worth  v.  original  cost 

Kind 

Amount 

Fashions 

Incomplete  lines 

Odd  sizes 

Tarnished,  soiled,  and  shopworn 

g^ods 
Experienced  judgment 
> 

Lumping  together  v.  classifying 
Valuation  of  each  group 
Discounts  and  interest 
Expert  local  advice 


Location 

Personal  with  proprietor 

Personal  with  sales  persons 

Good  service 

Firm  name 

Advertised  value 

Valuation  of  goodwill 

Illwill 

Fully  paid 

Installment  purchases 
Consignments 
Chattel  mortgages 
Bill  of  sale 


Pig.  3. — Buying  a  Business 


Buying  a  Bn,siness  37 

TEST  QUESTIONS 

1.  TVhat  three  primary  qualifications  should  one  possess  for 
the  retail  business? 

2.  What  factors  will  justify  the  establishment  of  a  new  store 
in  a  community  ? 

3.  "What  preliminary^  investigations  should  one  make  before 
buying  an  existing  store  ? 

4.  How  should  the  real  estate  be  treated  in  connection  with 
the  management  of  a  store  ? 

5.  What  precautions  should  be  observed  in  buying  invento- 
ried stock? 

6.  Into  what  groups  should  accounts  receivable  be  classified? 

7.  How  may  legal  ownership  of  the  stock  be  determined  ? 

8.  What  are  the  essential  provisions  of  a  bill  of  sale  ? 

9.  What  facts  enter  into  goodwill  ?    How  is  it  valued  ? 
10.  In  what  ways  may  allowances  be  made  for  illwill  ? 


CHAPTER  IV 
stori:  organization 

Fitting  Okganization  to  Functions 

The  functions  of  a  retail  store  are  to  buy,  to  store,  to 
display,  and  to  sell  merchandise  to  ultimate  consumers 
in  such  lots  or  amounts  as  desired  and  at  such  times  as 
desired.  In  consequence  of  these  functions  the  work  of 
the  retail  store  naturally  divides  itself  into  the  following 
lines: 

1.  Buying,  receiving,  and  stockroom  work. 

2.  Advertising  and  display. 

3.  Salesmanship. 

4.  Care  of  the  building  and  equipment. 

5.  Employment,  supervision,  education,  and  welfare  of 
employees. 

6.  Record  keeping.  These  large  divisions  are  in  turn 
subdivided  according  to  the  character  of  the  service  per- 
formed by  the  store. 

Within  these  main  lines  of  work  there  occur  a  multi- 
tude of  sublines.  For  example,  under  care  of  the  build- 
ing, there  is  generally  found  such  work  as  heating  the 
building,  ventilating,  providing  air  of  the  right  humidity, 
repair  work,  construction  of  fixtures,  running  the  ele- 
vators, caring  for  the  lighting,  cleaning,  painting,  var- 
nishing, decorating,  providing  and  caring  for  employees' 
lockers,  check  rooms,  toilets,  drinking  water,  lunch  room, 
etc.,  and  providing  protection  from  fire.     If  the  store 

38 


store  Organization  39 

delivers  its  goods  to  the  homes  of  the  purchasers,  a 
delivery  department  mil,  of  course,  be  needed.  If  the 
store  sells  goods  on  credit,  a  credits  and  collections 
department  must  be  added.  If  business  is  obtained 
through  the  mails,  a  mail-order  department  may  be 
installed,  and  so  on. 

In  addition  to  its  regular  merchandising  work,  some  of 
the  larger  stores  sometimes  add  other  service  depart- 
ments for  the  convenience  of  shoppers,  such  as  parcel 
checking  stations,  postal,  express,  and  telephone  stations, 
reading  and  writing  rooms,  offices  where  electric  light  and 
gas  bills  may  be  paid,  theatre  tickets  bought,  taxi  cabs 
ordered,  and  so  on.  Banking  facilities  are  in  some  cases 
provided  for  customers,  but  in  view  of  recent  disasters 
in  connection  wdth  certain  large  stores  having  banking 
departments,  these  departments  are  not  so  popular  as 
they  were  two  or  three  years  ago. 

Purposes  of  Organization 

The  objects  of  organization  are  obvious.  Organization 
is  effected  in  order  to  get  things  done,  to  place  definite 
responsibility,  to  secure  proper  performance,  to  make  it 
possible  to  place  employees  at  the  kinds  of  work  that  each 
is  best  fitted  for,  to  train  employees  in  specific  kinds  of 
work  so  that  expertnoss  may  be  developed  in  a  minimum 
of  time  and  at  a  minimum  of  expense.  It  is  impossible 
for  anyone  to  know  all  that  should  be  known  about  all 
departments  of  work  in  even  a  small  store.  By  organiza- 
tion and  departmentalization  the  indivichials  are  given 
certain  fields  in  which  each  may  reasonably  be  expected 
to  become  both  skilh'd  and  well  versed. 

Some  organization  is  absolutely  necessary.  All  stores 
are  organized,  although  most  stores  could  probably  be 
better  organized.    While  many  stores  need  more  organ- 


40  Retail  Store  Management 

ization,  there  is  also  the  danger  of  the  other  extreme, 
over-organization.  Whenever  the  organization  is  of  such 
character  as  to  discourage  initiative,  the  doing  of  the 
best  work,  or  of  the  right  spirit,  it  defeats  its  own  pur- 
poses. This  can  come  readily  through  a  too  fine  division 
of  labor,  a  too  minute  definition  of  responsibilities  that 
do  not  exactly  fit  each  case  as  it  comes  up,  and  thus  leaves 
the  worker  with  an  imperfect  guide  without  the  oppor- 
tunitv  to  make  a  new  definition  to  suit  the  needs  of  the 
case.  Organization  of  retail  store  work  and  of  employees 
must  always  encourage  initiative  and  independence  of 
thought  or  it  will  fail.  Customers  cannot  be  handled  in 
all  cases  by  rule.  General  policies  can  be  outlined,  but  the 
application  must  be  made  in  a  thoughtful  way  by  each 
individual  worker  whether  he  be  salesman,  floor  manager, 
credit  manager,  or  delivery  man. 

Organization  permits  of  definition  of  work  to  a  certain 
extent,  of  the  fixing  of  standards  of  performance,  the 
results  that  may  reasonably  be  expected  from  each 
worker,  and  of  the  presenting  of  definite  lines  of  respon- 
sibility so  that  credit  can  be  given  for  work  properly  done 
and  blame  placed  where  it  should  be.  It  makes  it  possible 
to  train  employees  for  their  work  in  the  most  direct  way. 
Organization  outlines  the  steps  to  be  taken  in  order  to 
secure  promotion;  hence,  tends  to  encourage  employees 
to  do  their  best. 

Charting  Organization 

The  reader  can  gain  a  better  idea  of  the  character  of 
retail  store  organization  by  a  study  of  the  accompanying 
chart,  Figure  4,  than  in  any  other  way.  Note  the  gen- 
eral divisions  of  work  and  the  subdivisions  under  each 
general  div-ision.    The  chart  does  not  nearly  exhaust  the 


store  Organization 


41 


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42  Retail  Store  Management 

possible  activities  of  a  store  but  is  intended  merely  to 
suggest  the  outlines. 

Also  note  that  the  chart  indicates  lines  of  work  and  not 
necessarily  positions.  In  large  stores  there  will  be  such 
great  amounts  of  work  to  be  done  in  each  line  that  from 
one  up  to  many  persons  may  be  employed  exclusively  in 
one  subdivision.  There  may  be  hundreds  of  salespeople 
each  along  with  several  others  selling  in  a  special  depart- 
ment presided  over  by  a  buyer.  There  may  be  several 
men  and  boys  who  give  their  entire  attention  to  delivering 
goods ;  others  will  spend  their  time  in  the  counting  room 
or  accounting  department.  In  fact,  the  labor  of  each  sub- 
division may  be  so  finely  divided  that  each  individual  may 
perform  but  a  small  part  of  the  kind  of  work  that  the 
subdivision  is  intended  to  do. 

In  small  stores  the  organization  can  not  be  drawn  out 
in  such  detail  among  the  people.  Generally  the  manager 
of  the  small  store  is  also  the  buyer  and  has  complete 
charge  of  the  equipment  and  service  lines  of  work.  Often 
he  prepares  the  advertising  and  sometimes  does  all  the 
accounting  work.  As  manager  of  these  various  lines  of 
work,  he  may  apportion  duties  of  great  variety  to  the 
salespeople.  Thus  a  salesman  in  a  small  store  may  have 
stockroom  duties,  may  trim  windows,  help  write  show 
cards,  and  may  also  be  charged  with  certain  duties  in  the 
equipment  and  service  department,  such  as  taking  care  of 
the  lights  and  awnings,  keeping  drinking  water  supplied, 
etc.  Another  salesman  may  also  be  delivery  man,  col- 
lector, and  adjuster.  Inspection  and  wrapping  may  be 
done  by  the  salespeople  entirely.  The  main  difference 
between  the  large  and  small  store  organization  is,  there- 
fore, mainly  one  of  division  of  labor.  In  the  small  store 
the  employee  is  called  upon  to  do  many  kinds  of  work, 
while  in  the  large  store  perhaps  only  one. 


Store  Organization 


43 


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44  Retail  Store  Management 

Next,  let  us  see  a  retail  organization  chart,  Figure  5, 
worked  out  for  positions  along  the  lines  shown  in  the 
preceding  chart. 

Actual  Store  Organization 

The  following  outline  shows  the  actual  store  organi- 
zation and  the  division  of  labor  among  executives  in  a 
store  employing  about  one  thousand  people : 

General  Manager 

Promotion  of  business 

Store  censorship 

Censorship  of  correspondence 

Advertising  and  publicity- 
Newspaper  contracts 

Show  windows 

Interior  decorating 

Fixtures  and  store  layout 

Demonstration  of  merchandise 

Adjustment  of  claims 

Mail-order  supervision 

Stock  keeping 

Store  signs 
Assistant  Manager 

Merchandise 

Stock  and  buying 

Statistics 
Superintendent 

Employment  bureau 

General  and  special  delivery- 
Employees'  permits  and  passes 

Employees'  personal  packages 

Employees',  delivery  packages 

Exchanges 

Transfers 

Systems 


Store  Organization  45 

Pay  roll  per  cent  (selling  and  non-selling) 

Ifltegrity  of  employees 

Economy  in  fixing  salaries 

Economy  in  number  employed  in  each  department    (selling 
and  non -selling) 

Character,  efficiency,  and  references  of  employees  engaged 

Detective  work 

School  of  instruction 

Employees'  coat,  lunch,  and  rest  rooms 
Head  Floor  Manager 

Supervision  of  floor  men 

Discipline  of  first  floor 

Service  on  floor 

Display  of  merchandise  on  first  floor 

Checking  umbrellas 

Orderly  appearance  of  main  aisle  and  of  first  floor 
Assistant  Superintendent 

Safety  of  store  and  protection  of  customers 

Protection  and  care  of  fixtures 

Elevators 

Machinery 

Sidewalks 

Warehouse  and  bam 

General  economy 

Porters 

Night-work  people  and  management  of  same 

Outsiders  working  in  store  day  or  night 

Suppression  of  expense  and  waste 

Fire  safeguards 

Sprinkler  and  tank  equipment 

Fire  buckets  and  chemicals 

Telephones 
Mr.  

Fire  drill 

Fire  buckets 

Shoplifting 

Receiving  and  raring  for  the  wants  of  institution  buyers 


46  Retail  Store  Management 


Mr. 


Lights 
Mr.  


Receiving  department  throughout  the  house  and  warehouses 

Stockrooms 

Purchasing  supplies 
Chief  Cashier 

Cashiers 

Insurance  of  all  kinds 

Deposit  purchase  department 
Auditor 

General  auditor 

Customhouse 

Post-Office 

Gas 

Timekeepers'  records 
Credit  Manager 

Credits 

C.  0.  D.'s 

Hold  tickets 

Will  calls 

Dressmakers '  discounts 

Wedding  trousseau  discounts 

Signing  charges 

Office  claims 

Efficiency  and  economy  of  office  help 
Correspondence  Chief 

Mail  correspondence 

Donations  and  charities 

Practical  Considerations  in  Organization 

The  organization  of  most  stores  is  the  result  of  growth 
following  lines  of  least  resistance  rather  than  the  result 
of  logical  analysis  of  the  needs  of  the  business.  Subdi- 
visions are  made  to  suit  immediate  convenience  rather 
tban  ultimate  good  to  the  business.    Employees  in  some 


store  Organization  47 

cases  are  required  to  specialize  too  closely  with  but  little 
or  no  hope  of  promotion ;  while  in  others,  executives  try 
to  do  the  work  of  so  many  departments  that  no  speciali- 
zation is  possible.  The  better  plan  would  be  to  distribute 
the  responsible  work  so  far  as  possible  among  those 
doing  only  routine  work,  setting  the  executives  free  to 
that  extent,  and  permitting  them  to  use  their  thought  in 
constructive  work.  For  example,  in  moderate-sized 
stores,  each  of  the  salespeople  after  a  year  or  two  of 
experience  should  have  something  to  think  about  besides 
the  work  of  selling.  One  way  of  getting  employees  to 
grow  is  by  giving  them  responsible  things  to  do,  and 
store  employees  will  respond  as  quickly  as  any  class  of 
people  to  this  sort  of  stimulation.  The  manager  of  the 
store  who  keeps  all  executive  work  and  planning  to  him- 
self is  making  a  big  mistake.  He  not  only  wears  himself 
out,  but  he  stunts  the  development  of  his  employees  and 
shuts  off  the  opportunity  to  profit  from  what  they  might 
contribute  to  the  concern. 

The  General  Manager 

The  general  manager  of  the  store  is  the  individual 
directly  responsible  for  its  success.  In  his  efforts  to 
increase  the  profits  and  place  the  store  upon  an  ever 
stronger  foundation  of  goodwill  in  his  community,  he 
must  be  the  organizer  of  the  business.  He  must  bo  able 
to  imagine  the  consequences  of  various  courses  of  action 
with  accuracy;  in  other  words,  he  must  have  foresight. 
He  must  be  a  judge  of  men  and  must  make  selections  for 
subordinate  executive  positions.  He  must  be  able  to 
inspire  liis  employees  with  enthusiasm,  to  draw  out  the 
best  efforts  of  every  man.  He  must  be  an  educator  in 
the  fullest  sense  of  the  word.  In  all  but  the  smallest 
stores  he  nnist   delogate  responsibility   ;md   duties.     In 


48  Retail  Store  Management 

doing  this,  be  needs  to  show  his  helpers  how  best  to  do 
tlieir  work  and  make  way  for  their  development  into 
experts  in  their  respective  fields.  Finally  he  must  know 
how  to  let  others  do  what  they  can  do  as  well  as  he  can. 
The  shrewdest  managers  follow  the  maxim,  '*to  do 
nothing  themselves  that  they  can  get  others  in  the  store 
to  do." 

The  Merchandise  Manager 

The  merchandise  manager  is  the  chief  or  head  of  the 
buyers  of  the  store.  It  is  his  work  to  prepare  the  buying 
budgets  for  each  department,  to  apportion  the  finances 
so  as  to  bring  the  best  returns.  Certain  limits  are  there- 
fore set  for  the  buyers  beyond  which  they  may  not  go 
without  special  consideration.  To  assist  him  in  fixing  the 
department  appropriations,  the  merchandise  manager 
makes  use  of  the  business  statistics  of  the  concern.  These 
records  of  past  achievements  include  purchases,  sales, 
advertising,  expenses,  weather  conditions,  competitive 
attractions,  not  only  for  each  of  the  years  in  which  the 
business  has  been  in  existence,  but  also  by  seasons  and 
months,  and  often  by  shorter  periods.  Thus  with  tables 
of  figures  or  charts  before  him,  showing  just  what  has 
been  accomplished  in  the  past,  what  has  been  successful, 
what  has  been  a  failure,  what  has  proved  profitable  and 
w^hat  not,  and  with  a  knowledge  of  the  conditions  of  the 
present,  he  draws  his  conclusions  as  to  what  each  depart- 
ment may  do  for  the  following  year,  season,  and  month. 
In  conferences  with  the  buyers  these  figures  are  consid- 
ered and  revised  if  thought  best.  Each  buyer  is  then 
notified  of  his  buying  quota  and  how  it  is  to  be  distributed 
as  to  time.  As  a  rule  no  attempt  is  made  to  regulate  or 
advise  the  buyer  as  to  what  to  buy  previous  to  the  buying. 
Purchases  must  be  approved  bv  the  merchandise  man- 


Store  Organization  49 

ager,  however,  and  if  tlie  buyer  is  not  successful  in  get- 
ting his  goods  at  satisfactory  prices,  terms,  conditions  of 
delivery,  and  discounts,  the  merchandise  manager  halts 
the  transactions  for  a  consultation. 

Special  appropriations  are  sometimes  made  to  depart- 
ments even  after  the  regular  budgets  have  been  fixed. 
Abrupt  changes  in  style  sometimes  demand  instant  pur- 
chases even  if  the  buyer  has  exhausted  his  department 
allowance.  In  other  cases  the  buyer  may  have  made  mis- 
takes in  his  buying  and  may  find  himself  unable  to  sell 
without  adding  other  goods,  qualities,  sizes,  or  varieties. 
Whatever  the  reason,  it  may  in  some  cases  be  profitable 
to  let  a  department  have  more  money  than  it  was  origi- 
nally planned  to  give  it. 

The  merchandise  manager  is  or  should  be  the  sales 
manager  of  the  store.  He  should  see  that  selling  condi- 
tions in  the  store  are  right,  that  the  marking  of  goods  is 
done  properly,  that  advertising  and  display  are  properly 
attended  to,  and  that  the  buyers  keep  in  touch  with  the 
latest  sales  ideas  as  well  as  with  merchandise.  Through 
his  position  he  is  able  to  gather  up  a  great  deal  of  valu- 
able information  about  merchandise,  markets,  demand, 
style  tendencies,  and  other  matters  of  like  importance. 
This  information  he  can  convey  to  the  buyers  and  through 
them  to  the  saleHpoo[)le  and  others  who  should  know  it. 

Every  merchandise  department  needs  the  help  of  a 
competent  city  shopper  or  comparison  head.  The  duties 
of  this  official  are  usually  to  spend  considerable  time  in 
competing  stores,  note  qualities  and  prices  of  goods 
offered  there,  and  compare  with  prices  of  similar  goods 
in  her  own  store.  Complaints  that  the  store's  prices  are 
too  high  arc  investigated  by  this  official.  Buyers'  state- 
ments made  to  the  advertising  man  are  similarly  checked. 
Disguised  as  a  shopper,  often  not  known  even  to  the  sales- 


50  Retail  Store  Management 

people  of  her  own  store,  the  comparison  head  does  vahi- 
able  service  for  her  store  in  its  competition  with  other 
stores. 

The  Advektising  Manager 

The  publicity  or  advertising  manager  is  responsible 
for  the  duty  of  letting  the  people  know  about  the  store 
and  its  merchandise.  Logically,  perhaps,  the  publicity 
manager  should  work  under  the  merchandise  manager 
instead  of  directly  under  the  general  manager  of  the 
store.  This  would  be  the  best  arrangement  if  the  mer- 
chandise manager  were  broadly  enough  trained  in  all 
cases  to  supervise  the  work  of  the  advertising  depart- 
ment. But  most  stores  consider  publicity  of  such  im- 
portance that  they  make  a  special  department  of  it,  and 
the  general  manager  makes  it  his  duty  to  keep  in  close 
touch  with  it  directly.  In  fact,  in  some  stores  of  national 
reputation  the  general  manager  is  the  real  head  of  the 
advertising  department,  not  only  dictating  its  policies, 
but  also  planning  its  work.  In  such  stores  the  so-called 
''advertising  manager"  is  little  more  than  a  copy  writer. 

The  publicity  department,  in  planning  its  work,  oper- 
ates in  closest  cooperation  with  the  merchandise  depart- 
ment. The  buyers,  as  a  rule,  supply  the  facts  used  in 
the  advertising  of  goods,  and  suggestions  for  the  devel- 
opment of  advertising  campaigns  come  from  buyers  and 
the  merchandise  manager. 

The  display  manager  is  indicated  in  the  charts  shown 
in  this  chapter  as  occupying  a  position  in  the  publicity 
department.  As  a  matter  of  fact,  the  writer  knows  of 
but  few  important  stores  where  this  form  of  organiza- 
tion exists.  Like  the  advertising  manager,  he  sometimes 
works  directly  under  the  general  manager,  in  others, 
under  the  merchandise  manager,  and  in  still  others  under 


Store  Organization  51 

the  store  superintendent.  The  charted  form  is  presented 
as  the  logical  way.  Window  and  store  displays  must  be 
correlated  with  the  advertising  and  are,  in  fact,  impor- 
tant parts  of  it.  Under  the  same  department  head  there 
can  be  no  question  that  the  work  will  be  carried  on  in 
closest  connection.  Practically,  however,  but  few  adver- 
tising managers  now  found  in  retail  stores  have  had  the 
training  or  experience  fitting  them  as  supervisors  of  the 
work  of  the  display  men ;  consequently  the  organization 
of  display  under  a  separate  department  is  best  under 
such  circumstances. 

The  Store  Superintendent 

The  store  superintendent  is  responsible  for  the  phys- 
ical plant  and  its  operation.  Under  his  direction  the  store 
is  cleaned,  heated,  lighted,  and  properly  ventilated.  Re- 
pairs, renewals,  and  additions  to  fixtures  are  provided 
by  him.  Usually  store  supplies  not  intended  for  sale  but 
for  use  in  the  store  are  bought  by  him  or  by  some  official 
working  under  him.  Elevators,  engines,  electrical  appa- 
ratus, safety  devices,  and  fire  protection  equipment  are 
under  his  charge. 

The  superintendent  also  organizes  and  conducts  the 
delivery,  exchange,  and  complaint  or  adjustment  depart- 
ments. The  inspecting  and  wrapping  force  is  usually 
under  his  direction.  In  some  cases  the  stenographers 
work  under  his  direction. 

In  most  stores  the  superintendent  is  also  charged  with 
the  duty  of  hiring,  training,  disciplining,  and,  when  neces- 
sary, dismissing  employees.  Through  him  the  promotions 
are  made,  increases  in  salary  granted,  and  changes  from 
one  department  to  another  approved.  The  firm  places 
upon  the  superintendent  the  responsibility  for  the  labor 
expense,  percentage,  both  selling  and  nonselling.  He 
must  strive  for  efficiency  and  economy. 


62  Retail  Store  Management 

In  modern  stores  bis  employment  department  is  sup- 
plemented by  an  educational  department  tbat  trains  tbe 
new  employees  for  tbeir  respective  positions  and  offers 
courses  of  instruction  to  tbe  older  employees  to  supple- 
ment tbeir  experience  and  tbus  make  tbem  more  valuable 
to  tbemselves  as  well  as  to  tbe  store.  Education  bas 
come  to  occupy  a  permanent  place  in  tbe  system  of  every 
store.  Salespeople,  casbiers,  inspectors,  wrappers,  ste- 
nograpbers,  and  delivery  men  are  all  sent  to  scbool,  at 
least  for  a  time,  in  tbe  modern  store.  How  tbis  form  of 
organization  may  be  improved  will  be  taken  up  in  a  later 
cbapter. 

All  pbases  of  welfare  work  for  employees  are  also  a 
part  of  tbe  superintendent's  spbere  in  most  stores  at 
present.  Tbe  welfare  director,  wben  one  is  employed,  is 
one  of  bis  aids.  Pbysicians,  nurses,  and  otber  belpers  are 
sometimes  added.  We  sball  see  sometbing  more  of  tbe 
possibilities  of  tbis  work  later  on. 

The  Office  Manager 

Tbe  office  manager  keeps  tbe  records  of  tbe  concern. 
Tbese  records  comprise  tbe  purcbases,  sales,  tbe  casb, 
credits,  goods  on  band,  pay  roll,  expenses,  insurance,  and 
so  on.  Tbe  auditing  of  tbe  store's  transactions  is  in 
cbarge  of  tbis  department.  Commonly,  tbe  store's  ste- 
nograpbers  work  under  tbe  direction  of  tbe  office  man- 
ager, but  in  otber  cases,  as  we  bave  indicated,  under  tbe 
superintendent.  Tbe  costs  of  doing  business  are  com- 
puted in  tbis  department  for  all  parts  and  departments  of 
tbe  store.  Statements  are  made  out  daily,  weekly, 
montbly,  and  at  tbe  end  of  eacb  season  and  year,  sbowing 
tbe  condition  of  tbe  business  in  various  details  for  tbe  use 
of  tbe  executives. 

In  addition  to  tbe  bookkeeping  records  already  referred 


Store  Organization  53 

to,  the  office  manager 's  department  is  responsible  for  the 
mailing  list  of  all  possible  customers  in  the  community, 
kept  in  live  condition  by  continual  checking,  additions, 
and  eliminations.  This  department  is  in  some  stores, 
though  not  in  all,  the  repository  for  the  records  of  the 
advertising,  window  displays,  sales  campaigns,  buyers' 
files  of  prices,  terms,  discounts,  and  lists  of  concerns  from 
whom  the  store  may  buy.  In  many  cases  such  records  are 
kept  in  the  departments  to  which  they  relate. 

The  office  manager  must,  obviously,  be  a  man  of  ability 
as  an  accountant,  one  able  to  handle  and  interpret  sta- 
tistics of  all  kinds  pertaining  to  merchandising.  He 
should  be  a  detail  man,  but  not  one  who  lets  detail  absorb 
his  power  to  see  general  tendencies.  Knowledge  of  the 
whole  business  is  most  essential;  hence  a  person  can 
hardly  hope  to  fill  this  position  as  outlined  without  con- 
siderable retail  experience.  If,  as  is  often  the  case,  the 
office  manager  is  also  the  credit  manager,  he  must  have 
all  the  qualifications  of  a  credit  manager  in  addition  to 
those  required  of  a  store  accountant. 

Miscellaneous  Officl\ls 

As  has  already  been  suggested,  the  organization  of  a 
store  may  not  only  din'or  in  considerable  detail  from  the 
above  but  may  also  have  other  departments,  lines  of 
work,  and  institutional  features  than  those  indicated  in 
the  chart.  For  example,  nearly  every  manager  of  a  large 
store  has  the  help  of  a  legal  adviser  who  may  or  may 
not  have  his  entire  time  taken  up  by  store  duties.  Some 
stores  employ  an  official  known  as  an  "expense  man- 
ager," whose  <luty  it  is  to  seek  continually  for  places 
where  ihv.  store  can  eliminate  expense  or  waste.  The 
common  observation  is  that  such  an  offieial  earns  his 
salary  many  times  over  in  a  large  store. 


54  Retail  Store  Management 

Recently,  several  stores  have  employed  efficiency  man- 
agers whose  duties  are  somewhat  similar  to  those  of  the 
expense  manager,  but  generally  broader  in  scope.  The 
efficiency  manager  not  only  seeks  to  eliminate  wastes  but 
also  to  improve  existing  methods  of  doing  the  work  of 
the  store.  In  some  cases  the  efficiency  manager  gives  most 
of  his  attention  to  the  improvement  of  the  record  keeping 
part  of  the  institution,  in  others  to  the  physical  plant, 
the  store,  its  layout,  and  its  fixtures,  and  in  still  others 
to  the  employees  or  the  human  element.  In  the  last- 
named  case  the  efficiency  manager  may  take  the  methods 
of  a  teacher.  He  may  first  determine  the  best  methods 
of  doing  the  various  kinds  of  work  and  then  teach  or 
have  taught  those  methods.  It  seems  certain  that  the 
efficiency  manager  has  come  to  stay  in  larger  retail  stores. 
His  work  will  associate  him  closely  with  the  superin- 
tendent, if,  indeed,  he  is  not  made  an  official  under  the 
superintendent's  direction.  At  present  the  efficiency  man- 
ager in  at  least  half  a  dozen  stores  known  to  the  writer 
works  under  the  direction  of  the  general  manager  and 
serves  as  his  aid. 

Group  and  Committee  Organizations 

Several  other  elements  of  organization  are  found  in 
most  retail  stores.  The  employees  are  not  only  organized 
for  the  purposes  of  the  work  in  the  store  but  also  for 
recreation  and  welfare.  Thus  many  stores  maintain  ath- 
letic clubs,  musical  organizations,  dramatic  clubs,  benefit 
societies,  and  so  on.  The  experience  of  the  stores  upon 
this  point  seems  to  vary,  but  a  number  have  found  that 
this  form  of  organization  of  employees  is  a  most  valuable 
thing  for  the  store,  and  as  such,  really  is  a  part  of  the 
necessary  work  of  the  store. 

Then  there  is  the  quasi-organization  of  the  store  into 


store  Organization  55 

conference  groups,  buyers'  meetings,  heads  of  depart^ 
ments'  meetings,  and  general  store  meetings  intended  to 
liven  up  the  spirit  of  the  store  and  its  people.  Various 
adaptations  of  the  committee  system  so  commonly  found 
in  industrial  concerns  may  be  effectively  used  in  retail 
stores. 

TEST  QUESTIONS 

1.  Into  what  six  functional  groups  does  the  work  of  a  retail 
store  naturally  divide  ? 

2.  What  are  the  main  purposes  of  organization  in  a  store  ? 

3.  What  are  the  main  principles  that  should  guide  effective 
organization  ? 

4.  Enumerate  the  chief  purposes  accomplished  by  charting  a 
store  organization. 

5.  In  what  main  points  will  the  chart  of  a  small  store  organi- 
zation differ  from  that  of  a  large  organization  ? 

6.  How  does  a  chart  indicating  lines  of  work  differ  from  one 
indicating  positions? 

7.  IIow  do  practical  considerations  modify  the  ideals  of  effi- 
cient organization  ? 

8.  Describe  tlio  work  of  the  general  manager — the  mer- 
chandise manager — the  advertising  manager — the  store  superin* 
tendent — the  oflfice  manager. 

9.  What  are  the  more  common  miscellaneous  officials  found 
in  store  organizations? 

10,  Indicate  the  possibilities  for  efficiency  in  group  and  com- 
mittee systems  of  organizations. 


CHAPTER  V 

BUYING 

Charactebistics  of  a  Good  Retail  Buyer 

It  is  difficult  to  characterize  the  modern  retail  store 
buyer.  All  agree  that  he  must  be  of  clean  character,  safe, 
and  dependable,  but  in  particulars  regarding  his  work 
there  is  considerable  difference  of  opinion.  Generally,  it 
may  be  said,  that  he  must  be  courteous,  methodical,  a 
clear  thinker,  and  somewhat  reserved.  There  are  talka- 
tive buyers  who  are  successful,  but  the  buyer  who  says 
but  little,  especially  to  salesmen  when  they  are  showing 
their  samples  to  him,  is  likely  to  learn  most  and  get  the 
best  bargains. 

The  average  salesman  calling  upon  buyers  is  a  man 
fairly  well  trained  in  character  reading.  Many  of  them, 
if  not  all,  seek  the  buyer's  weak  spots,  the  points  of 
special  interest  to  him,  his  hobbies,  and  peculiarities.  The 
talkative  buyer  is  much  more  likely  to  reveal  these  and 
to  place  himself  at  a  disadvantage  in  the  bargaining 
process,  while  the  quiet,  reserved  buyer  keeps  the  sales- 
man guessing  and  doing  his  best  to  make  his  goods  and 
his  services  interesting. 

The  buyer,  whether  he  owns  the  store  he  buys  for,  or 
is  the  employee  of  a  retailing  concern,  must  be  a  mer- 
chant in  the  fullest  sense  of  the  word.  As  an  employee 
who  gives  his  entire  time  to  this  work,  his  purchases  may 
run  from  a  hundred  thousand  up  to  a  million  dollars  per 

56 


Buying  57 

year.  He  is  the  man  responsible  for  the  success  of  the 
department  and,  therefore,  must  be  able  to  get  the  best 
not  only  out  of  his  merchandise  buying  but  also  out  of  his 
selling  and  the  employees  within  his  department.  He 
must  be  able  to  work  with  his  people,  to  delegate  author- 
ity, to  get  cooperation,  and  to  inspire  enthusiasm. 

He  must  keep  himself  from  any  influence  exerted  by 
salesmen  and  their  employers,  the  factories,  and  whole- 
salers, through  gratuities,  presents,  treats,  and  so  on. 
Time  was  wlien  the  seller  was  expected,  as  a  matter  of 
course,  to  entertain  the  buyer,  make  a  good  deal  of  him, 
and  spend  considerable  money  on  him  personally.  This 
custom  has  passed  away.  The  offer  of  such  gratuities 
is  now  considered  as  a  form  of  bribery  by  many  of  the 
l^est  retail  houses,  and  no  self-respecting  buyer  would 
accept  even  of  the  hospitality  of  the  seller  unless  he  could 
reciprocate  by  similar  returns  paid  for  by  himself.  Many 
concerns  employing  several  buyers  have  made  the  rule 
that  no  such  presents  or  treats  shall  be  accepted,  and  the 
suppliers  have  been  so  notified. 

The  evil  of  the  custom  of  treating  the  buyer  is  self- 
evident.  There  could  be  no  reason  for  such  expenditures 
other  tlian  lh(!  hope  that  they  might  help  influence  the 
buyer  in  his  purchases.  The  buyer  would  hardly  expect 
to  ac<^iept  the  favors  without  showing  his  favor  in  return. 
Thus,  both  consciously  and  unconsciously,  the  ))uyer 
would  be  influenced  toward  certain  goods  at  certain  prices 
and  terms,  by  something  entirely  apart  from  the  mer- 
chandise. Tn  the  long  run  the  business  could  hardly  fail 
to  lose,, and,  luckily,  if  only  the  amount  expended  by  the 
seller  on  the  buyer.  Money  expended  on  buyers  must  be 
pnid  by  the  buyers  in<lirectly,  sometimes  with  interest. 
Tlie  modern  view  of  eliminating  this  custom  is  highly 


58  Retail  Store  Manageynent 

meritorious  and  deserves  tlie  support  of  botli  retailers 
and  their  suppliers. 

Education  of  the  Buyer 

The  buyer  needs  a  specialized  body  of  knowledge  about 
the  goods  he  handles,  the  markets  in  which  he  buys  or  is 
likely  to  buy,  and  about  the  house  for  which  he  is  buying. 

He  needs  to  know  goods  as  an  expert,  what  they  are 
made  of,  how  they  are  made,  differences  in  quality  and  the 
causes,  and  their  values.  His  knowledge  of  goods  needs 
to  be  both  theoretical  and  practical.  For  example:  He 
should  be  able  to  tell  by  observation  what  the  quality  is 
of  the  silk  that  he  is  buying,  but  he  should  also  know  the 
chemistry  of  silk,  of  dyes,  and  of  weighting  materials  used 
in  the  silks  he  handles.  He  should  be  able  to  tell  by  taste 
w^hat  is  the  quality  of  the  basket-fired  tea  that  he  is 
offered,  but  he  should  also  know  why  basket-firing  differs 
from  the  other  processes  of  curing  tea  in  producing  cup 
effects. 

His  knowledge  of  markets  will  comprise  particulars  in 
great  detail  of  where  the  goods  he  handles  may  be  ob- 
tained, the  ways  in  which  they  are  handled  and  sold,  the 
current  prices,  terms,  and  discounts,  the  influences  oper- 
ating on  the  market,  the  competition  among  buyers  and 
sellers,  and  so  on.  He  should  always  remember  that  his 
primary  function  is  to  buy  merchandise,  not  terms. 

His  knowledge  of  his  own  house  will  comprise  such 
matters  as  its  financial  means,  its  buying  experiences  in 
the  past  in  his  lines,  what  is  customary,  what  can  be  done 
in  case  of  emergency,  the  credit  of  the  house,  the  gross 
profits  wanted,  and  the  expenses  of  his  department. 
There  are  several  other  things  more  particular  in  char- 
acter that  the  buyer  needs  to  know.  For  example,  he 
must  know,  or  have  records  that  show,  goods  on  hand, 


Buying  59 

goods  ordered  but  not  yet  delivered,  relations  of  tBe 
amount  of  goods  on  hand  to  the  lateness  of  the  season, 
sales  in  the  past  compared  with  the  present  for  a  period 
of  years,  effects  of  weather  conditions  on  sales  plans, 
successful  selling  methods,  and  so  on.  As  the  merchan- 
diser of  his  department  he  must  furnish  the  advertising 
man  with  the  sales  the  latter  will  use  in  his  advertising 
and  think  out  new  sales  methods  and  plans  to  be  used  as 
occasion  demands. 

The  buyer's  education  is  a  most  important  part  of  his 
preparation  for  his  work.  Art,  literature,  and  science  are 
valuable  general  educational  accomplishments,  and  for 
that  reason  every  buyer  should  be  a  reader  of  a  wide 
variety  of  substantial  literature  and  a  patron  of  good 
music,  art,  and  drama  to  the  extent  of  his  time  and  means. 
Several  well-known  buyers  in  this  country  possess  per- 
sonal, well-used  libraries  that  would  do  credit  to  the 
homes  of  professional  men  among  whom  we  have  come  to 
expect  such  interests.  He  should  frequently  visit  mer- 
chandising centers  and  expositions  to  get  the  latest  ideas. 
Small  dealers  can  watch  the  big  dealers. 

In  addition  to  the  general  value  of  a  good  education 
and  broad,  intellectual  interests,  the  buyer  has  need,  as 
already  pointed  out,  for  special  knowledge  concerning  the 
kind  of  goods  he  handles,  market  conditions,  and  business 
methods.  Tlie  l)uyer's  experience  is,  to  be  sure,  one  of 
the  most  valual)le  sources  of  such  knowledge,  but  no 
man's  experience  is  wide  enough  to  make  other  means  of 
gathering  facts  unnecessary.  Visits  to  market,  talks  with 
other  buyers,  and  interviews  with  salesmen  shonhl  be 
made  to  yield  profitable  facts  and  points  of  view.  Every 
buyer  who  wishes  to  succeed  nowadays  must  read,  not 
one,  but  many,  if  not  all,  the  good  trade  periodicals  in  his 
field.    The  quality  of  the  trade  press  is  steadily  iniprov- 


60  Retail  Store  Management 

ing,  and  the  buyer  cannot  afford  to  get  along  without 
its  help. 

Factors  Affecting  What  To  Buy 

There  is  another  type  of  literature  that  buyers  should 
be  interested  in.  In  a  town  of  30,000  population  in  the 
Middle  West,  the  writer  found  upon  inquiry  at  the  post- 
office  that  nearly  900  copies  of  a  certain  well-known  home 
paper  for  women  were  distributed  there  monthly.  Sev- 
eral hundred  copies  of  other  women's  periodicals  also 
were  taken  by  the  women  of  the  town.  The  influence  of 
these  periodicals  in  an  educative  way  on  the  minds  of  the 
women  in  this  town  must  be  enormous.  Consider  how  the 
advertising,  the  style  pages,  the  illustrations,  and  the 
stories,  all  cooperating  in  the  dissemination  of  ideas 
about  certain  standards  of  living,  must  build  up  specific 
wants  among  the  readers.  The  buyer  who  has  failed  to 
grasp  the  importance  of  the  woman's  home  magazine  as 
a  factor  in  determining  what  women  and  their  families 
want  has  made  it  difficult  for  himself  to  interpret  the 
demands  of  customers  rightly.  The  buyer  of  women's 
goods  and  the  goods  that  women's  judgment  is  passed 
upon,  and  this  includes  a  large  part  of  everything  for 
final  consumption,  should  read  what  he  knows  his  women 
customers  need.  The  buyer  of  farm  implements,  hard- 
ware, and  other  goods  consumed  on  farms  should  read 
the  farm  papers  which  are  read  by  his  customers.  The 
supplier  of  goods  for  any  special  class  of  people  should 
follow  the  periodical  literature  that  goes  to  that  class. 
"Wliat  the  people  read  they  are  likely  to  think  about,  and 
what  they  think  about  will  influence  their  wants. 

The  moving  picture  shows  exert  an  influence  on  popu- 
lar demand  that  should  not  be  overlooked.  The  movie 
fan  is  growing  moustaches  like  Charlie  Chaplin's.    The 


Buying  61 

young  women  note  how  the  heroine  of  the  play  is  dressed. 
Food,  utensils,  table  silver,  dishes,  flowers,  equipment  of 
homes,  decorative  features,  and  so  on,  are  observed,  per- 
haps unconsciously,  but  they  are  no  less  effective  in 
changing  ideals  and  ways  of  living  at  home.  In  other 
words,  where  once  was  local  diversity  in  standards  of 
living  and  in  demands  for  necessities  and  comforts  of  life 
due  to  the  differences  between  races  and  nationalities, 
the  moving  picture  show,  the  popular  press,  and  several 
other  agencies  are  standardizing  for  all.  This  is  an  im- 
portant fact  for  the  buyer,  and  he  can  hardly  afford  to 
neglect  to  note  what  it  is  that  interests  his  customers  and 
therefore  affects  their  demands  for  goods.  If  he  will 
work  with  these  influences,  he  is  almost  sure  of  success. 

Studies  in  Local  Demands 

In  determining  what  to  buy  for  his  store  or  department 
the  buyer  must  study  his  customers.  Communities,  as  a 
rule,  are  made  up  of  a  great  variety  of  people  of  all  ages, 
many  nationalities,  religions,  occupations,  and  interests. 
But  to  tlie  shrewd  observer  these  people  soon  classify 
themselves  into  groups,  and  it  is  then  easy  to  observe 
which  of  these  groups  are  dominant  in  the  community. 

For  example,  every  community  has  both  light  and  dark 
complexioiied  people,  but  if  the  leading  people  of  town, 
so  far  as  fashion  goes,  are  light  complexioned  and  blue- 
eyed,  tliese  will  set  the  color  standards  in  clothing,  mil- 
linery, and  dress  accessories,  within  certain  limits,  for  the 
town.  The  leaders  will  ])e  imitated  here  as  everywhere, 
and  the  buyer  will  wisely  select  merchandise  that  will  be 
most  satisfactory  in  colors,  designs,  lines,  and  materials 
to  the  loaders. 

Habits  of  consurnption  need  to  be  noted.  One  com- 
munity is  called  conservative  because  it  is  slow  in  taking 


62  Retail  Store  Management 

up  novelties,  another  progressive  where  the  ''latest"  is 
always  in  demand.  In  the  food  line,  some  communities 
want  green  tea,  others  black;  some  want  green,  fresh 
cheese,  while  others  want  well-cured;  some  groups  want 
herring,  others  mackerel;  some  want  white-shelled  eggs, 
others  prefer  brown  or  yellow;  som^e  want  red  apples, 
others  green;  and  so  on.  The  important  question  any 
buyer  must  answer  for  his  community  is  which  does  it 
want.  The  buyer  owes  his  success  not  to  attempts  to 
change  the  demands  of  people,  but  rather  to  quick  and 
clear  perception  of  what  is  wanted  and  just  how  it  is 
wanted.  The  buyer's  function  is  to  find  goods  just  such 
as  his  customers  Avant.  What  he  likes  himself  is  imma- 
terial. The  buyer  must  learn  to  like  what  he  knows  his 
trade  vnW  like. 

Policy  with  Eefekence  to  Novelties 

While  general  studies  of  a  community,  such  as  sug- 
gested above,  will  be  found  very  helpful  in  determining 
the  main  lines  of  demand,  the  buyer  will  need  other 
methods  to  help  him  to  estimate  the  demand  for  particu- 
lar goods.  The  general  studies  will  be  found  more  helpful 
in  gauging  demands  for  staples  than  for  novelties.  What 
shall  a  buyer  do  to  determine  whether  his  trade  will  take 
the  new  things  not  tried  out  before? 

Novelties  are  a  source  of  profit  when  they  can  be  moved 
quickly  and  turned  at  once.  When  well-selected,  they 
offer  an  opportunity  to  increase  the  volume  of  sales  con- 
siderably. They  possess  special  advertising  possibilities. 
But  novelties  are  hazardous  in  that,  if  they  fail  to  move 
during  their  brief  season,  they  are  practically  a  dead  loss. 
Hence,  the  importance  of  careful  selection  is  obvious. 

A  general  study  of  the  community  and  the  experience 
of  the  store  will  serve  as  guides  to  show  whether  novelties 


Buying  63 

go  well,  as  a  rule,  or  not.  A  progressive  trade  community 
may  be  presumed  to  be  ready  for  new  things  at  all  times, 
within  reasonable  limits.  In  an  average  community,  per- 
haps one-third  of  the  amount  expended  for  clothing, 
shoes,  house  furnishings,  and  so  on,  will  be  for  goods  that 
are  different  from  those  usually  bought  in  patterns  or 
designs,  in  colorings,  in  sizes,  or  what  not.  One-third  for 
novelties  and  specialties  and  two-thirds  for  staples  is  a 
fair  average  of  ordinary  American  conditions.  In  such 
communities,  the  buyer  will  make  this  fact  a  rule  in  his 
purchases. 

Another  guide  to  the  demand  for  novelties  is  the  num- 
ber of  customers  who  ask  for  such  goods.  The  buyer 
needs  to  have  an  accurate  idea  of  the  extent  of  such  calls, 
and  for  that  purpose  should  have  all  salespeople  in  the 
store  use  ''want  slips"  or  a  "want  book."  A  record 
should  be  made  of  every  call  for  merchandise  which  the 
store,  for  any  reason,  cannot  supply,  and  these  records 
should  be  collected  and  examined  every  day  by  the  buyer, 
and,  in  a  large  store,  by  the  merchandise  manager.  These 
records  not  only  reveal  the  demand  for  unusual  goods, 
novelties,  and  specialties,  but  also  sliow  whether  the 
store's  system  of  ordering  and  receiving  its  regular  lines 
of  goods  is  working  properly.  If  calls  are  numerous,  or 
even  only  occasional,  for  goods  that  the  store  should 
have  on  hand,  the  buying  system  is  weak  and  deserves 
criticism. 

Calls  for  novelties  if  repeated  once  or  twice  may  serve 
as  a  guide  to  making  small  purchases  as  tryouts.  There 
is  a  danger  in  interpreting  calls  as  demand  too  freely.  A 
call  for  morcliandisc  not  in  stock  may  sometimes  come 
from  a  transient  visitoi-  in  tlie  town,  one  who  may  never 
come  to  the  store  again  and  who  may  have  no  inflnence 
on  the  local  demand.     A   call  may  be  for  special  mer- 


64  Retail  Store  Management 

chandise  that  others  in  the  community  could  not  possibly 
want.  Such  calls  should  be  handled  by  taking  the  cus- 
tomer's orders  for  the  goods  wanted  if  possible.  Occa- 
sionally competing  stores  send  out  their  shopper  or 
comparison  head  on  an  errand  to  call  for  some  article  to 
see  if  it  is  kept  and  not  intending  to  buy.  Since  the 
business  of  the  store  shopper  is  not  known  to  the  sales- 
people, her  call  may  be  interpreted  as  demand.  The 
problem  requires  the  use  of  judgment. 

The  buyer  who  spends  a  good  share  of  his  time  on  the 
floor  selling  goods,  conferring  wdth  customers,  and  who 
has  the  cooperation  of  his  salespeople  is  thereby  helped 
in  making  his  decision  as  to  the  demands  for  novelties. 
His  knowledge  of  his  customers,  their  methods  of  trading, 
how  they  live,  what  they  read,  what  their  recreations  are, 
and  so  forth,  helps  to  make  his  judgment  of  what  they 
will  want  sound. 

Finally,  the  buyer  may  adopt  a  tryout  plan  in  deter- 
mining whether  to  invest  in  some  specialty  or  not.  He 
may  exhibit  a  sample  in  the  window  or  in  some  good  loca- 
tion in  the  store,  not  for  the  purpose  of  selling  it,  but 
with  the  idea  of  noting  the  number  of  calls  for  it.  The 
calls  may  be  handled  by  taking  orders  for  the  article.  If 
the  number  is  satisfactory,  an  investment  in  a  supply 
may  be  justified.  This  system  of  trying  out  the  demand 
is  subject  to  a  great  many  variations  and  to  a  mucli  wider 
use  than  given  it  at  present.  If  handled  properly,  it  will 
save  the  buyer  and  his  store  a  good  deal  of  money  every 
year. 

How  People  Spread  Their  Purchasing  Power 

Another  guide  to  the  buying  of  a  community  is  its  earn- 
ing power.  In  some  states  and  cities  statistics  are  avail- 
able showing  the  population  classified  by  wage  and  salary  • 


Buying  65 

groups.  If  sucli  statistics  prepared  by  public  bodies  are 
not  available,  the  buyer  would  do  well  to  make  some 
studies  of  his  own  to  determine  how  many  wage-earning 
people  there  are  in  the  city,  how  their  wages  range,  and 
what  the  average  incomes  are  per  family.  Communities 
differ  markedly  in  this,  due  to  the  difference  in  industries. 
The  result  is  a  marked  difference  in  what  is  bought  at  the 
retail  stores. 

More  than  fifty  years  ago  a  German  economist  named 
Engel  made  some  studies  of  the  way  the  people  of  Saxony 
expended  their  incomes  and  found  that  while  there  was 
a  considerable  difference  among  some  families,  the  ma- 
jority of  them  with  any  given  income  expended  the  same 
amount  for  the  various  necessities  of  life.  Similar  studies 
have  since  been  made  in  other  countries,  including  the 
United  States,  with  the  same  results. 

It  has  been  found  that  most  families  spend  the  same 
percentage  or  proportion  of  tlieir  incomes  for  clothing, 
no  matter  how  large  or  small  their  incomes  may  be.  The 
majority  of  families  expend  the  same  proportion  for  fuel 
and  light  and  also  for  rent,  no  matter  what  the  income. 

The  percentage  expended  for  food,  however,  tends  to 
go  down  as  the  income  goes  up,  and  the  percentage  for 
comforts  and  luxuries  goes  up  as  the  income  goes  up. 

To  illustrate,  an  average  family  expends  about  14  to 
15  per  cent  of  its  income  on  clothing  no  matter  whether 
its  income  is  $600  or  $1 ,200  per  year.  A  thousand  families 
with  an  income  of  $800  per  family  will  spend  about 
$112,000  for  clothing,  that  is,  14  per  cent  of  their  total 
incomes.  But  as  to  food,  the  family  with  the  $600  income 
will  spend  nearly  50  per  cent  or  $o00  for  food,  while  the 
family  getting  $1,200  will  spond  about  33^  pr.  ct.  or  $400. 
It  is  to  })e  noted  that,  while  the  proportion  expended  by 
the  family  witli  the  larger  inronie  is  less,  the  amount  is 


66 


Retail  Store  Mo/uagement 


really  more  in  dollars.  In  the  expenditures  for  tlie  com- 
forts and  luxuries,  the  family  with  the  $600  income  can 
spend  only  from  G  to  8  per  cent,  or  $35  to  $50,  while  the 
family  with  an  income  of  $1,200  spends  25  per  cent,  or 
$300.  ^ 

Thus  every  line  is  affected  by  the  incomes  of  its  cus- 
tomers. Many  lines,  in  the  comfort  and  luxury  group 
especially,  cannot  find  a  market  among  poorer  people  at 
all.  Even  foods,  groceries,  meats,  and  so  forth,  find 
much  more  limited  markets  among  the  poor  than  among 
the  rich. 

The  buyer  can  use  Engel's  law  to  help  him  in  deter- 
mining the  consuming  capacity  of  his  community  if  he 
can  get  the  figures  that  show  the  earning  power  of  the 
people  living  there.  The  tables  in  Figures  6  and  7  illus- 
trate the  principle  in  greater  detail. 


$200    

up  to  $    300 


Per  Cent  of  Total  ExrENDiTUREs 


Food 


Clothing 


Eent 


Fuel  and 
Light 


Miscel- 
laneous 


Under 

$    200 

300 

400 

500 

600 

700 

800 

900 

1,000 

1,100 

1,200 


up  to 
up  to 
up  to 
up  to 
up  to 
up  to 
up  to 
up  to 
up  to 
and  over 
Average 


400 

500 

600 

700 

800 

900 

1,000 

1,100 

1,200 


50.9 
47.3 
48.1 
46.9 
46.2 
43.5 
41.4 
41.4 
39.9 
38.8 
37.7 
36.5 
43.1 


8.7 

16.9 

8.0 

8.7 

18.0 

7.2 

10.0 

18.7 

7.1 

11.4 

18.6 

6.7 

12.0 

18.4 

6.2 

12.9 

18.5 

5.8 

13.5 

]8.1 

5.3 

13.6 

17.1 

5.0 

14.4 

17.6 

5.0 

15.1 

17.5 

4.9 

14.9 

16.6 

4.7 

1.5.7 

17.4 

5.0 

13.0 

18.1 

5.7 

15.6 
18.8 
16.1 
16.5 
17.2 
19.4 
21.6 
23.0 
23.2 
23.7 
26.1 
25.4 
20.1 


Fig.  6. — Expenditures  of  American  Families 
(Investigated  by  the  United  States  Bureau  of  Labor.) 


Buying  67, 

Fresh  beef  $  50.25 

Salt  beef   5.26 

Fresh  hog  products 14.02 

Salt  hog  products 13.89 

Vinegar   and  pickles 4.12 

Other  food  20.40 

Other  meat 9.78 

Poultry 9.49 

Fish    8.01 

Eggs    16.79 

Milk 21.32 

Butter    28.76 

Cheese   2.62 

Lard 9.35 

Tea    5.30 

Coffee    10.74 

Sugar    15.76 

Molasses   1.69 

Flour  and  meal 16.76 

Bread    12.44 

Rice    2.05 

Potatoes   12.93 

Other  vegetables 18.85 

Fruit    16.52 

Rent    99.53 

Principal  and  interest  on  mortgage 12.15 

Taxes    5.75 

Insurance    20.98 

Fuel    32.21 

Lighting   8.15 

Clothing    107.90 

Organization  fees   8.90 

Religious  purposes   7.60 

Charity    2.39 

Furniture  and   utensilH 26.28 

Amusomonts  and  vacations 12.30 

Books  and   newspapers 8.38 

Intoxicating  liquors   12.45 

Tobnr-ro    1 0.91 

Sifkn.'Hs  and    death 20..52 

Other  purposes    45.14 

Total  for  all  purpoaes .$768.64 

Fio.  7. — Analysis  of  ExponHPs  of  an  Average  American  Family 
(From  the  T'Mi  Atimml  T.nlior  Itcport  of  the  United  HtatcH  Hiironn  of  I,nl)or.) 


68  Retail  tStore  Maiuigenieni 

How  To  Buy 

Buying  scientifically  involves  taking  into  careful  con- 
sideration not  only  the  possible  customers,  but  also  the 
store  and  its  means,  and  the  sources  of  supply.  How 
much  shall  be  bought  at  a  time  must  be  determined  by 
balancing  the  advantages  of  quantity  purchases  against 
the  added  costs  in  caring  for  larger  supplies  of  goods. 
The  economies  of  larger  purchases  should  bo  compared 
with  the  economies  of  small  purchases. 

If  sources  of  supply  are  distant,  or  if  the  supply  itself 
is  limited  and  the  demand  increasing,  these  facts  will 
constitute  important  reasons  for  buying  in  quantity. 

There  is  a  maxim  widely  quoted  ''Buy  little  and  buy 
often"  that  needs  emphasis.  Probably  most  buyers  err 
on  the  side  of  buying  too  much.  The  offers  of  quantity 
prices,  of  bonuses,  fair  deals,  samples  for  distribution, 
extra  discounts,  forw^ard  dating,  and  so  on  are  held  out 
as  baits  for  the  buyer  and  he  frequently  bites  off  more 
than  he  can  chew. 

Speculative  Buying 

It  should  be  remembered  that  there  are  several  specu- 
lative features  about  most  quantity  purchases,  and  when 
the  buyer  goes  into  quantities,  he  is  a  speculator  rather 
than  a  retail  store  buyer.  There  is  a  place  for  specula- 
tion in  retail  goods  without  doubt,  but  the  average  retail 
store  buyer  is  hardly  well  enough  equipped  to  succeed. 

Speculative  buying  requires  considerable  capital,  and 
the  chances  for  loss  are  high.  The  slumps  are  likely  to 
come  at  most  inconvenient  times  for  retail  store  men,  and, 
taking  it  all  in  all,  buying  more  than  the  retail  store  needs 
from  day  to  day,  or  week  to  week,  is  wrong  in  principle 
from  a  strictly  merchandising  standpoint.     Even  when 


Buying  69 

a  retail  buyer  knows  quite  definitely  what  he  will  need 
during  a  coming  season,  except  for  the  plainest  staples, 
it  is  best  to  buy  only  a  part  of  what  is  needed,  say  not  to 
exceed  two-thirds  of  the  anticipated  season's  demand. 
It  is  better  to  have  something  new  coming  in  all  the  time, 
something  for  the  salespeople  to  be  interested  in  and 
about  which  they  can  tell  their  customers.  Buying  in 
small  quantities  permits  the  store  to  change  its  policies 
in  case  of  sudden  changes  in  demand.  The  funds  not 
tied  up  in  merchandise  can  be  used  in  buying  up  excep- 
tional snaps,  or  novelties  that  come  in  after  the  season's 
start,  or  for  any  unexpected  purpose.  Cash  in  the  bank 
can  be  turned  to  any  use.  Cash  tied  up  in  merchandise 
on  tlie  shelves  must  take  its  chances  with  the  market. 

Most  large  stores  as  well  as  great  numbers  of  success- 
ful small  stores  buy  all  the  time.  The  stock  is  gone  over, 
•and  goods  sold  off  are  replaced  almost  upon  the  day  that 
they  are  sold.  The  wholesaler  or  manufacturer  from 
whom  the  retailer  buys  is  made  the  surplus  stock  carrier. 
During  the  last  few  years,  orders  for  single  pairs  of 
shoes,  one-sixth  dozen  of  underwear,  and  similar  quan- 
tities of  other  merchandise  have  become  more  and  more 
frequent.  The  speculative  element  is  placed  on  the  sup- 
plier, who  is  usuall.y  much  better  equipped  to  handle  it 
than  the  retailor  who  is  busy  with  a  thousand  and  one 
other  things  and  cannot  be  presumed  to  be  a  market  spe- 
cialist on  all  the  Hnes  he  carries. 

It  may  be  said  in  conclusion  of  this  subject  that  if  the 
buyer  must  buy  quantities,  he  should  confine  the  specula- 
tive part  of  it  as  much  as  possible  to  a  very  limited  list 
of  items  of  which  he  has  made  a  special  study  and  which 
he  is  in  position  to  watch  very  carefully.  ''Tips"  will  of 
course  be  given  freely — often  by  "disinterested"  sales- 
men.    Self-restraint  is  essential. 


70  Retail  Store  Management 

Buying  Lines 

One  of  the  essentials  of  successful  buying  is  to  divide 
the  purchases  into  groups  corresponding  to  the  lines  in 
which  the  buyer  wishes  the  store  to  specialize.  One  of 
such  classifications  simply  divides  the  merchandise  into 
staples  and  novelties.  The  line  of  staples  needs  to  be 
kept  fairly  complete  as  to  sizes,  designs,  colors,  or 
whatever  its  kind  may  be.  Novelties  may  be  confined  to 
those  sizes  and  designs  that  are  most  used.  For  ex- 
ample, in  a  ready-made  dress  department,  the  staples 
should  include  a  complete  run  of  sizes,  if  possible ;  but  the 
novelties  should  be  selected  for  the  sizes  from  misses  16 
to  38  bust.  No  small  store  with  a  limited  trade  area  could 
hope  to  do  anything  with  novelties  running  in  sizes  up  to 
46  bust  measure  or  more,  2i/^a  shoes,  and  so  on.  The 
problem  in  buying  staples  is  to  keep  a  sufficient  supply 
always  on  hand,  not  too  many,  but  never  short.  In  nov- 
elties, the  problem  is  to  sell  them  out  as  quickly  as  possi- 
ble and  procure  something  different. 

Another  classification  frequently  made  is  based  on  price 
— low,  medium,  and  high.  Each  grade  should  appeal  to 
a  definite,  particular  class  of  trade,  and  when  the  buyer 
is  in  the  market,  he  must  keep  before  his  mind  the 
demands  of  each  of  these  classes  of  trade  and  try  to  get 
both  quantity  and  quality  that  will  fit  it. 

Still  another  classification  followed  by  at  least  one  large 
eastern  store  dealing  in  women's  wearing  apparel  in- 
cludes: (1)  best  line  at  the  price  in  the  city  upon  which 
little  profit  is  earned  but  w^iich  serves  as  advertising; 
(2)  good  but  also  profitable  line;  (3)  staple  line;  (4) 
novelties  or  specialties;  and  (5)  extra  sizes. 

For  small  stores  with  limited  capital  it  is  a  safe  policy 
to  handle  as  few  lines  or  brands  as  possible,  specializing 


Buying  71 

on  them  as  it  were,  and  making  the  most  of  each.  These 
lines  should  be  selected  with  reference  to  their  particular 
fitness  for  the  community  and  as  profit-getters  for  the 
store. 

If  the  store  can  get  the  exclusive  sale  of  a  line  so  much 
the  better,  but  the  buyer  should  look  up  the  things  that 
are  somewhat  different,  so  far  as  possible,  from  what  is 
offered  by  mail-order  houses  and  other  price-competing 
institutions.  Merit  and  suitableness  if  coupled  with 
exclusive  sale,  go  far  toward  insuring  the  store  a  good 
business  even  if  the  profits  per  sale  are  not  large. 

Buying  Job  Lots 

Some  care  needs  to  be  exercised  by  every  store  in 
buying  job  lots.  There  are  and  always  will  be  at  certain 
times  legitimate  jobs  that  must  find  their  way  through 
dealers  to  the  consumers.  Manufacturers  frequently 
make  mistakes  and  produce  more  than  there  is  a  demand 
for  at  the  regular  prices.  In  consequence  the  undistrib- 
uted portions  have  to  be  forced  into  the  market,  and  the 
method  used  is  to  offer  them  at  a  reduced  price.  Some- 
times manufacturers  have  quantities  of  their  goods 
returned  to  them  by  dealers  for  one  reason  or  another. 
These  goods  usually  have  to  be  jobbed.  In  other  cases 
the  manufacturers  produce  to  fill  orders,  but  do  not  de- 
liver because  of  bankruptcy  or  failure  of  some  of  their 
customers.  Such  sui7)Iuscs  must  be  disposed  of  in  some 
way  at  the  end  of  each  season;  there  are  usually  odds  and 
ends  that  must  be  cleared  out.  Finally,  the  manufacturer 
sometimes  needs  cash  in  a  hurry  and  must  sell  his  prod- 
ucts at  a  price  to  get  money. 

All  the  above  mentioned  are  real  factors  causing  legiti- 
mate job  lots.  But  the  job-hunting  retailer  also  finds 
occasionally  that  some  manufacturers  lie  in   wait  for 


72  Retail  Store  Management 

biui  and  sell  him  ''job  lots"  that  were  really  produced 
to  be  sold  in  this  way,  and  for  which  the  retailer  pays  all 
they  are  worth  at  standard  prices.  It  seems  a  safe  rnlo 
to  follow,  never  to  buy  a  job  lot  until  after  examining  tlio 
goods,  certainly  not  until  after  the  goods  are  made  and 
the  conditions  known  that  caused  them  to  be  jobbed. 

System  in  Buying 

In  dealing  with  his  suppliers,  the  buyer  should  leave 
nothing  to  their  imaginations,  as  to  time  for  delivery, 
shipping  directions,  back  ordering,  and  so  on.  Prices, 
terms,  and  discounts  are,  of  course,  a  part  of  the  trans- 
action and  need  to  be  definitely  understood  by  both  par- 
ties. The  buyer  will  do  well,  even  if  representing  but  a 
small  store,  to  have  order  blanks  of  his  own,  just  as  tl'ie 
large  stores  all  use,  with  spaces  for  all  data  concerning  the 
purchase,  such  as  name  and  address  of  firm  from  whom 
purchased,  name  of  the  salesman,  date,  items  of  merchan- 
dise with  prices  and  footings,  terms,  dating,  shipping 
directions,  and  any  other  matter  thought  essential.  These 
should  be  filled  out  in  duplicate  so  that  each  party  to  the 
transaction  may  have  a  copy.  For  purposes  of  store 
records  it  may  be  worth  while  to  have  two  extra  copies, 
one  for  the  accounting  di\'ision  and  another  for  the  buyer 
and  merchandise  man.  This,  however,  is  a  matter  of 
store  system  which  need  not  be  discussed  here. 

In  his  dealings  with  his  suppliers,  either  when  in  the 
market  or  at  his  home  store,  the  buyer  cannot  afford  to 
be  anything  but  courteous  to  the  salesmen.  If  square 
vnth  them,  the  very  large  majority  will  be  square  in 
return.  Every  buyer  should  make  it  a  point  to  see  every 
salesman's  line  just  for  its  possible  educational  /alue. 
Not  every  salesman  will  present  a  new  idea,  but  if  only 


Buying  73 

one  in  five  has  something  to  show  of  value  to  the  buyer, 
the  time  spent  on  the  five  would  be  well  spent. 

The  buyer  should  keep  his  appointments  and  promises 
to  the  letter,  and  should  expect  similar  courtesies  in 
return.  The  buyer  who  browbeats  salesmen  who  call  on 
him  will  now  and  then  find  salesmen  who  will  be  able 
to  get  even  in  unpleasant  ways.  Attempts  to  run  down 
salesmen 's  prices,  unless  founded  on  definite  "knowledge 
of  values,  merely  as  a  bluff,  is  likewise  poor  policy. 
Salesmen  learn  to  fix  their  prices  for  the  buyer  who 
higgles  about  them  every  time.  After  all,  both  buyer 
and  salesman  are  human  beings,  and  just  straight,  human 
honesty  and  appreciation  are  needed  to  make  the  work  of 
each  lighter  and  more  pleasant.  Business  is  business, 
but  this  does  not  mean  that  it  should  be  devoid  of  humor, 
sjTiipathy,  and  understanding. 

TEST  QUESTIONS 

1.  Why  is  a  good  buyer  an  important  factor  in  the  success  of 
the  store? 

2.  Indicate  the  most  essential  characteristics  of  a  good  buyer. 
8.  Outline'  some  of  the  educational  and  reading  requirements 

of  a  good  buyer. 

4.  "What  factors  should  the  buyer  consider  in  determining  the 
local  demands  for  a  ])ro(luct? 

n.  Describe  the  main  factors  which  should  govern  the  ])olicies 
of  a  buyer  with  reference  to  novelties. 

6.  How  may  a  buyer  make  effective  use  of  Engel's  law? 

7.  What  factors  enter  the  question  of  how  to  buy? 

8.  Into  what  general  classes  may  a  buyer  divide  his  lines? 
What  principles  should  govern  the  elassification? 

9.  What  points  sliould  be  observed  in  buying  job  lots? 


CHAPTER  VI 
the  store  accounting  system 

The  Purpose 

The  purpose  of  the  store's  accounting  is  to  present 
the  condition  of  the  business  in  terms  of  dollars  and 
cents.  A  good  accounting  system  should  show  the  store 's 
incomes  and  outlays  in  such  a  way  and  in  such  detail 
as  to  point  out  to  the  managers  not  only  whether  the 
business  as  a  whole  is  succeeding,  but  also  just  which 
parts  are  making  a  profit  and  which  a  loss.  A  good 
accounting  system  mil  disclose  the  wastes  and  leaks  of 
the  business.  It  will  show  the  lines  along  which  the 
future  business  should  be  promoted. 

To  obtain  suitable  credit  either  at  banks  or  with  whole- 
salers the  retailer  is  almost  invariably  asked  to  present 
a  statement  of  his  business.  If  the  accounting  system 
is  such  as  to  nmke  possible  a  complete,  accurate,  positive 
report,  that  fact  in  itself  is  a  recommendation  for  credit 
rating. 

In  case  of  fire  or  other  accident  to  the  business  covered 
by  insurance  the  accounting  system,  if  properly  con- 
ducted, will  serve  as  valuable  evidence  in  any  court  at 
law,  and  losses  may  readily  l^e  recovered- 
There  is  an  old  maxim,  ''Always  oonduf^t  your  busi- 
ness as  if  you  were  going  to  sell  out  at  once."  In  selling 
the  business  the  conditions  disclosed  by  a  good  account- 
ing system  may  be  used  to  advantage.    Assets  are  un- 

74 


I 


Store  Accounting  System  75 

covered,  and  values  may  be  definitely  placed.  A  good 
accounting  system  helps  in  making  the  sale  of  the 
business. 

Kinds  of  Accounts  To  Be  Kept 

The  kind  of  accounting  system  needed  by  a  store  will 
depend  very  largely  upon  its  organization,  whether  a 
corporation,  a  partnership,  or  owned  by  an  individual. 
It  will  also  depend  upon  the  class  or  kind  of  goods  handled 
and  the  amount  of  business. 

Though  a  dangerous  plan,  many  small  shopkeepers 
have  but  little  accounting  and  carry  the  details  of  the 
business  in  their  heads.  This  works  in  many  cases  for 
long  periods  of  time  for  small  businesses,  but  would  not 
work  at  all  for  a  large  business.  For  these  reasons  noth- 
ing but  the  principles  of  retail  accounting  can  be  out- 
lined here.  As  a  matter  of  fact,  even  the  smallest  retail 
store  without  an  accounting  system  is  taking  dangerous 
chances.  Bankruptcy  court  proceedings  almost  invari- 
ably indicate  bad  accounting  as  a  cause  of  disaster. 

A  retail  concern  naturally  does  business  with  whole- 
salers, or  with  wholesale  suppliers  on  the  one  hand  and 
with  customers  on  the  other.  Obligations  are  incurred 
by  the  retailer,  to  his  suppliers,  and  by  customers  to  the 
retailer  that  are  met  by  payments  of  cash,  by  credit,  or 
by  exchange.  As  a  result  the  business  needs  accounts 
with  its  suppliers,  its  customers,  its  cash,  and  its  mer- 
chandise A  niiiribor  of  regular  channels  of  expense 
occur  that  will  demand  separate  accounts,  such  as  sal- 
aries for  clerks,  rent,  fixtures,  upkeep,  delivery,  etc. 
Although  it  is  not  the  purpose  of  this  book  to  outline 
the  details  of  an  ac/;ouriting  system,  still  the  principle 
underlying  can  best  be  illustrated  by  listing  the  more 
Important  accounts  that  a  retail  business  should  keep. 


76  Retail  Store  Management 

LIST  OF  ACCOUNTS  KEPT  BY  EETAIL  STOBES 

1.  Credit  customers'  accounts 

2.  Cash  account 

3.  Merchandise  account 

4.  Purchase  accounts 

5.  Expense  accounts 

These  accounts  are  subclassified  in  various  ways,  some 
of  which  will  be  illustrated  further  on. 

Depaetmentalization  and  Its  Limits 

In  order  that  the  accounting  system  may  show  just 
what  part  of  the  business  is  gaining  and  what  part  losing 
or  making  no  progress,  classification  and  departmentah- 
zation  is  necessary.  The  merchandise  should  be  depart- 
mentalized, and  expenses  should  be  classified. 

One  of  the  earliest  forms  of  departmentalization  seen 
in  the  general  merchandise  stores  is  the  division  of  the 
general  stock  into  lines  corresponding  to  those  handled 
by  specialty  stores — groceries,  dry  goods,  shoes,  hard- 
ware, etc.  While  this  is  a  step  in  the  right  direction, 
departmentalization  is  now  carried  very  much  further. 
Specialty  stores  themselves,  such  as  grocery  stores,  shoe 
stores,  and  jewelry  stores  often  classify  their  merchan- 
dise stocks  into  a  dozen  or  fifteen  or  even  more  groups. 
By  applying  accounting  to  each  of  these  groups  instead 
of  to  the  whole  stock  as  a  unit,  the  profitable  lines  are 
definitely  discovered  and  the  unprofitable  lines  isolated 
and  eliminated. 

How  far  departmentalization  should  be  carried  is  hard 
to  say.  There  is  a  limit  beyond  which  the  cost  of  ac- 
counting or  record  keeping  is  greater  than  any  possible 
profits  to  come  from  such  records.  But  any  line  or 
group  of  lines  whose  sales  run  up  into  two  or  three 


Store  Accounting  System  11 

thousand  dollars  of  sales  per  year  may  profitably  be 
considered  a  department.  A  business  having  sales  ex- 
ceeding $30,000  per  year  can  probably  reap  benefits 
much  in  excess  of  additional  expense  by  having  its  goods 
classified  into  ten  departments.  A  concern  having  an 
annual  turnover  of  $100,000  can  profitably  install  de- 
partment accounting  for  at  least  twenty  departments,  if 
its  goods  naturally  divide  into  that  many  classes.  In 
some  stores  accounting  is  carried  to  the  logical  limit  of 
a  department  for  every  line  of  goods  carried.  Most 
merchants  balk  at  such  fine  subdivision  because  of  the 
expense  and  labor  incident  thereto,  but  as  time  goes  on 
it  seems  likely  that  more  and  more  complete  depart- 
mentalization will  be  demanded  by  the  accounting  depart- 
ment. 

Depaetmental  Distribution  of  Expense 

If  departmentalization  is  to  prevail  at  all,  there  must 
be  some  well-considered  plan  for  apportioning  expenses. 
An  improper  distribution  may  easily  make  a  profitable 
department  show  a  loss  or  a  losing  department  show  a 
gain.     Such  results  are  dangerously  misleading. 

One  plan  frequently  used  for  distributing  expense  is 
to  charge  each  department  in  the  same  ratio  that  its 
sales  bear  to  the  total  sales  of  the  store.  This  is  not  a 
fair  distribution  for  all  expenses.  Certain  departments 
cause  a  larger  or  smaller  proportion  of  certain  classes 
of  expenses  than  other  departments.  A  rug  department, 
for  example,  recjuires  an  unusually  large  proportion  of 
space.  Some  departments  must  be  located  on  tiie  ground 
floor.   Others  require  more  advertising  space,  and  so  on. 

These  conditions  suggest  different  bases  of  distribu- 
tion for  \jirious  items.  This  matter  recjuires  much 
analysis  at  the  beginning  but  is  not  difficult  to  operate 


78  Retail  Store  Management 

wbeu  once  properly  established.  The  writer  may  sug- 
gest a  few  bases  of  distribution : 

Rents — based  on  floor  space  area  and  value  according 
to  location. 

Heat  and  ventilation — volume  of  air  space  and  ease  of 
providing. 

Light — area  or  number  of  lights  used  and  hours 
burned. 

Advertising — amount  of  space  taken  by  each  depart- 
ment. 

Delivery  costs — number  of  packages  and  cost  of  each. 

Interest,  taxes,  and  insurance — average  inventory 
value  of  stock. 

This  list  is  merely  suggestive.  Expenses  which  can- 
not be  allocated  on  a  fairer  basis  may  be  charged  in  pro- 
portion to  sales. 

Classification  of  Expenses 

Expense  needs  to  be  classified  so  that  one  may  clearly 
see  where  the  outlays  of  the  business  go  and  thereby 
judge  where  economies  may  be  made.  A  normal  expense 
classification  for  most  retail  stores  would  include  the 
following  items  ^ : 

EXPENSES  OP  CONDUCTING  A  RETAIL  STORE 

I.  Buying  expense. 

(a)  Salaries  and  wages  of  the  buying  force. 

Includes   that   portion    of  salary   of  manager   or 
buyer  proportionate  to  time  given  to  buying. 

(b)  Traveling. 
(e)    Miscellaneous. 


1  This  outline  of  store  expenses  is  adapted  from  the  Bureau  of  Business 
Research,  Harvard  University. 


Store  Accounting  System  79 

II.  Selling  expense. 

(a)  Salary  and  wages  of  the  sales  force. 

Includes  that  portion  of  salary  of  manager  or 
buyer  proportionate  to  time  given  to  selling, 
directing  sales,  and  toward  collections. 

(b)  Advertising. 

1.  Newspapers  and  periodicals. 

2.  Circulars. 

3.  Display. 

4.  Donations. 

5.  IV'Iiscellaneous. 

(c)  Wrapping  and  packing. 

III.  Delivery  expense. 

(a)  Wages  of  delivery  force. 

(b)  Stable  and  garage  expense. 

(c)  Payments  for  express  and  parcel  postage  and  con- 

tracts for  delivery  service. 

IV.  Management  expense. 

(a)  Management  and  office  salaries. 

Includes  that  portion  of  salary  of  manager  or 
buyer  proportionate  to  time  given  to  managing. 

(b)  Office  supplies. 

1.  Stationery,  printing,  and  postage, 

2.  Account  books. 

3.  Miscellaneous. 
V.  Fixed  charges  and  upkeep. 

(&)  Rent. 

1.  Store. 

2.  Warehouse. 

(b)  Heat,  light,  and  power. 

(c)  Insurance  on  stock  .  nd  al>oije  equipment. 

1.  Fire. 

2.  Burglary. 

3.  Fidelity. 

4.  Plate  glass. 

5.  Employers'  liability. 

6.  Merchandise  en  route. 


80  Retail  Store  Mcmagement 

7.  Water  sprinkler  damage. 

8.  Life  insurance  in  partnerships. 

(d)  Taxes  on  stock  and  store  equipment. 

(e)  Repairs  and  renewals  of  store  equipment. 

(f)  Depreciation  of  store  equipment.  * 
VI.  ^Miscellaneous  expenses. 

(a)  Telephone. 

(b)  Water  and  ice. 

(c)  Cold  storage. 

(d)  Janitor. 

(e)  Miscellaneous  sundries. 

(f)  Interest  on  capital  borrowed. 

(g)  Losses  from  bad  debts. 

(h)  Expense  of  collecting  slow  accounts. 

The  tables  which  follow,  Figures  8,  9,  and  10,  illustrate 
the  cost  of  doing  retail  business.  Figure  8,  showing  the 
tabulated  result  of  the  grocery  investigation  ^  carried  on 
by  the  Bureau  of  Business  Research,  of  Harvard  Uni- 
versity, is  of  considerable  importance  to  those  engaged 
in  that  line  of  retailing  business  and  lends,  as  well,  con- 
creteness  to  the  meaning  of  the  foregoing  expense 
figures.  The  percentages  in  this  table  are  percentages  of 
net  sales,  and  all  figures  have  been  adjusted  to  a  uniform 
basis.  For  each  item  listed  the  figure  shows  (1)  the  low- 
est figure  found,  (2)  the  highest  figure,  and  (3)  the  com- 
mon figure.  A  fourth  group  is  given  on  some  items 
.showing  the  standards  attained  by  the  more  efficient 
stores. 

Any  grocer  who  keeps  his  'ccounts  so  that  he  can  deter- 
mine the  exact  expenditure  for  salaries,  advertising, 
deliveries,  rent,  etc.,  may  make  valuable  comparisons 
with  the  items  here  listed.     Whenever  his  expense  ex- 


2  This  summary  includes  stores  which  sell  groceries  only,  and  also  stores 
which  sell  both  groceries  and  meats  and  provisions. 


Item 
[For    percentages,    net   sales  =100%] 

Low 

High 

Coiniiion 

Standards 

attained 

by  a  group 

of  more 

elficient 

stores 

Gros.s  nrofit  on  merchandise 

7o 

14.6 
0.1 
0.0 
0.1 
3.5 
0.01 

0.03 

4.5 

0.6 

0.3 

1.1 

0.3 

0.01 

0.4 

0.3 

0.1 

0.03 
0.01 

.01 
.03 

0.8 
0.04 

0.0] 

O.o:; 

0.01 
0.1 
0.01 
10.4 

3.3  • 
0.2 

% 
27.9 

2.4 

0.5 

2.4      1 
10.6 

1.8 

1.4 
10.8 
3.5 
3.4 
5.9 
2.8 
0.4 
4.0 
4.1 
0.8 

0.5 
0.5 

1.4 
0.9 

5.6 
0.6 

0.6 
0.7 
1.2 
1.4 
2  2 
''.5  " 

11.0 

1.7 

% 
21.0 
0.5 
0.02 
0.5 
6.0 
0.1 

0.4 
7.0 
1.5 
1.5 
3.0 
1.5 
0.1 
1.7 
1.3 
0.2 

0.1 
0.1 

0.1 
0.2 

2.0 
0.2 

0,1 

o.a 

0.1 
0.5 
0.5 

i(;.5 

2.5-5.5 
0.8 

% 

Salaries  and  wages  of  bupng  force. .  . 
Other  buvinff  exDeuse 



Total   buying   expense 

Salaries  and  wages  of  sales  force 

Advertising   

Wrappings   and   miscellaneous   scUin;^ 
exuense    

5.0 
0.3 

Total  selline  expense 

5.5 

Wages  of  delivery  force 

Other  delivery  expense 

Total   delivery   expense 

1.0 
1.0 
2.5 

Management  and  office  salaries 

Office  supplies  and   expense 

Total    manaffcment    expense 

Rent  

Heat,  lieht  and  power 

0.8 
0.15 

Insurance   on   slock   and   store   eciuip- 
Taxes   

Repairs  and  renewals  of  store  equip- 
ment    

Total    fixed    charges    and    upkeep    ex- 
pen. se    

1.5 

Telephone    

Tee  and  cold  storage: 

Groceries  only    

Oroceries  and   iiie.its  and  provision.s. 

Other   niiscellaneou.s  expense 

Total  miscellaneous  exj»en.sc 

0.1 
0.2 

0.3 

IjO.s.ses  from  bad  debts 

0.2 

Total  of  expense  statoincnt 

13.0 

Net   profits   from    merciinndiHe    opera- 
tions    

Interest    

Number  nf  stock-turns  a  year: 

Groceries  only    

3.5 

7.0 
$5,000 

23.8 

26.4 

$20,000 

7.0 

9.0 

$10,000 

12.0 

Groceries  and  moats  and  provisions. 
Average  annual   sales  per  salesperson. 

14.0 

•Low. 

Fio.  8. — Grocery 

(Compiled  by  the  Uurcnu  of  Dusinci 

Invest  ig 
19  Itcoearrh 

at  ion 
,  Harvard 

UniverHity. 

) 

Percentage 

Item 

Lowest 
Percent- 
age 

IIlKhost 
Percent- 
afro 

PercontaKP 

a))out  Which 

Data  Centre 

(not  an 

average) 

alwnit  Wliich 
a  ("oncentra- 
tioii  is  Suf- 
ficient to  In- 
dicate a 
Kealizable 
Standard 

Low  grade 

Gross    profit,    including    dis- 

23-25 

counts     

20 

42 

High  grade 

30-33 

i 

Total  operating  expense,  not 

Low  grade 

Low  grade 

including   freight   and  cart- 

23 

20 

age   and   interest 

18 

35 

High  grado 

27      ■ 

High  grade 
25 

Buying  expense    

0.8 

1.8 

1.1 

1.0 

Sales  force    

5.0 

10.3 

8.0 

7.0 

Advertising    

0.0 

8.8 

2.0 

1.5 

Deliveries    

0.0 

1.4 

0.6 

0.4 

Rent     

1.8 

14.6 

5.0 

3.0                        \ 

Interest    

1.0 

7.9 

2.5 

2.0 

Stock-turns    

1.0 

3.6 

1.8 

2.5 

Annual  sales  of  average  sales- 

1 

person    

$5,000 

$16,500 

$10,000 

i 

Fig.  9. — Summary  Table  of  Percentages  of  Costs  of  Doing  Business  in 

Shoe  Stores 
(Compiled  by  the  Bureau  of  Business  Research,  Harvard  University.) 


Kind  of  Business 


Number 
of  Stores 


Range 


Model 
Group 


Num))pr 

Falling 

within 

Mode 


Grocery    

Dry  goods    

Furniture    

Shoes    

Hardware    

Men 's  clothing   

Drugs    

Jewelry    

Department  stores   

Five  and  ten  cent  stores. 


17 
11 

8 
8 
8 
7 

O 
•f 

4 
11 

2 


12-22% 

16-25 

22-28 

16-27 

17-26 

20-30 

24-30 

25-32 

22-30 

25-27 


141/2-17% 
11-22 
22-24 
21-23 
19-22 
27-30 


28 
26-27 


11 
6 
6 
4 
4 
3 

2 
5 


Fig.  10. — Some  Figures  on  the  Costs  of  Retailing  Business  in  Wisconsin 
(Collected  by  the  author.    From  Economics  of  Retailing,  Ronald  Press  Co.) 


Store  Accounting  System  83 

ceeds  the  common  figure,  it  might  be  considered  a  danger 
signal. 

In  expressing  expense  in  percentage  form,  custom 
varies  as  to  what  should  be  taken  as  the  base.  Some  use 
the  cost  of  the  merchandise  while  others  the  sales.  Either 
may  be  used  in  getting  accurate  results  if  adhered  to 
strictly.  The  great  error  heard  of  so  frequently  nowa- 
days in  figuring  the  percentage  of  profits  is  using  the 
cost  as  the  base  in  figuring  mark-on  and  sales  as  the  base 
in  computing  expenses.  The  result  is,  of  course,  not  only 
inaccurate  but  disastrous. 

Certain  advantages  favor  using  the  sales  as  the  base 
for  all  percentage  computations.  Expense  naturally 
comes  out  of  sales,  and  but  little  difficulty  is  found  in 
computing  mark-ons  on  the  basis  of  sales  value.  Nearly 
every  large  retail  organization  as  well  as  many  noted 
accountants  have  gone  on  record  as  in  favor  of  computing- 
percentage  on  sales. 

It  is  assumed  here  that  either  method,  if  followed  cor- 
rectly, will  yield  accurate  results.  Because  most  of  the 
literature  on  the  subject  favors  conjputing  the  percent- 
ages on  the  sales  value,  this  method  is  followed  by  the 
author  in  this  work. 

The  Balance  Sheet 

Tlic  most  fundamental  work  of  the  accounting  depart- 
ment, and  the  last  to  be  prepared,  is  tlie  financial  state- 
ment, or  bahmcc  sheet.  Tliis  report  is  referred  to  at  this 
point  because  all  accounting  nmst  aim  at  it  in  the  end. 
The  balance  sheet  must  show  wlu\t  the  manager  of  the 
business  wants  to  know;  hence  the  accounting  system 
must  be  built  up  to  provid<^  the  information  wanted  here. 

There  is  as  yet  no  uniform  standard  method  of  making 
out  a  retail  store  financial  statement,  but  the  following 
is  a  very  acceptable  presentation. 


84  Retail  Store  Management 

Assets 

Cash  on  hand. 
Cash  in  bank. 
Due  from  customers. 
Notes  receivable. 
Merchandise  on  hand. 
Furniture  and  fixtures. 
Real  estate  and  buildings. 
Office  supplies  on  hand. 
Advertising  supplies  on  hand. 
Unexpired  insurance  premiums. 
Miscellaneous   other  assets. 

Total  Assets. 

Li  abilities 

Due  to  creditors  for  mercliandise. 
Due  for  expense  bills. 
Notes  payable. 
Miscellaneous  liabilities. 

Total  Liabilities. 

Value  of  business,   excess   of   assets  over  liabilities. 

Capital  at  beginning  of  period  (Date ). 

Profit  or  loss  during  period   ( months). 

The  form  of  balance  sTieet  presented  above  is,  of  course, 
merely  suggestive.  For  the  larger  stores  more  formal 
statements  are  presented,  embodying  the  best  technique 
and  practices  in  accounting.  A  knowledge  of  the  general 
principles  of  accounting  is  highly  desirable  in  this 
connection. 

The  management  value  of  a  simple,  well-adapted,  fact- 
telling,  accounting  system  cannot  be  gainsaid.  The 
statistical  investigations  which  have  been  made  as  to 
costs  in  various  lines  of  merchandising  give  certain 
approximate  standards  for  purposes  of  comparison. 
More  intelligent  competition  on  the  basis  of  facts  in  the 
retail  field  is  a  pressing  necessity  and  can  be  secured  only 
through  accounting  methods  that  do  really  account. 


store  Accounting  System  85 

TEST  QUESTIONS 

1.  "What  are  some  of  the  practical  advantages  of  a  good  store 
accounting  system  ? 

2.  Show  how  functions  determine  the  classes  of  accounts  to  be 
kept. 

3.  List  the  five  primary  classifications  of  retail  accounts. 

4.  What  principles  should  govern  the  departmentalization  of 
accounts  ? 

5.  Describe    some    ways    for    departmental    distribution    of 
expense. 

6.  Outline  an  acceptable  form  for  a  financial  statement  of  a 
retail  store. 


CHAPTER  VII 

THE    INVENTORY 

The  foundation  of  good  accounting  in  a  store  is  the 
inventory.  A  correct  list  of  all  merchandise  on  hand, 
properly  classified  according  to  kind  and  length  of  time 
in  department,  with  valuations,  is  one  of  the  absolutely 
necessary  essentials  to  forming  a  correct  judgment  of  the 
condition  of  the  business  and  the  best  possible  future 
course  of  action. 

In  tlie  past  the  inventory  had  no  other  use  than  to 
supply  the  bookkeeper  with  the  necessary  figures  on  the 
value  of  merchandise  on  hand  to  enable  him  to  close  his 
books  at  the  end  of  the  fiscal  year.  Consequently  this 
inventory  was  taken  but  once  a  year,  generally  about 
December  31,  or  in  January  or  even  February.  February 
being  a  quiet  month  so  far  as  business  is  concerned  has 
been  found  a  favorable  time  by  many  dealers.  The  need 
for  more  careful  accounting  has  brought  in  the  custom 
of  taking  a  semi-annual  inventory  in  many  of  the  best 
conducted  stores,  although  the  single,  annual  inventory 
is  all  that  is  taken  by  most  stores. 

The  traditional  inventory  has  been  changed  in  many 
ways  so  as  to  make  it  yield  the  maximum  of  information. 
The  following  will  make  clear  some  of  its  aims  and  the 
methods  of  taking  it. 

Methods  of  Taking  Inventory 

In  the  best  stores  inventory  taking  is  now  planned  in 
advance  so  well  that  it  actually  takes  only  a  couple  of 

86 


The  Inventory  87 

days  to  complete  the  process.  It  is,  of  course,  taken  by 
departments,  but  goods  within  departments  are  carefully 
arranged  according  to  lines,  sizes,  and  qualities.  In  some 
cases,  as  in  hardware  stores  or  hardware  departments, 
even  the  counting  of  items  is  done  in  advance,  and  a  tag 
is  attached  to  each  compartment,  drawer,  or  box  to  show 
the  number  of  articles  within,  with  spaces  following  for 
salespeople  to  indicate  the  number  taken  out  and  sold 
between  the  time  of  counting  and  of  actual  inventory. 

Inventory  sheets  are  prepared  in  advance.  The  loose- 
leaf  system  has  been  found  more  effective  than  a  bound 
inventory  book.  Each  sheet  is  consecutively  numbered 
in  advance  so  that  if  any  sheets  are  missed  later  on,  that 
fact  will  become  apparent  by  mere  checking  of  the  pages. 
Blank  spaces  are  provided  at  the  top  of  each  sheet  for 
the  department  number  or  letter,  the  date  of  the  inven- 
tory, and  the  names  of  those  who  used  it. 

When  all  is  ready,  the  employees  of  the  store  should  be 
divided  into  teams  or  pairs.  Each  buyer  should  assume 
cliarge  of  his  department  or  in  case  the  buyer  is  in  charge 
of  several  departments,  the  head  salesperson  should  lead 
in  the  work  and  call  off  the  stock  on  passing  from  item  to 
item,  and  an  assistant  should  enter  the  item  on  the  sheet, 
repoating  the  item  and  its  quantity  and  other  information 
to  the  one  who  calls  it.  Repeating  serves  to  show  that  the 
figures  are  understood  correctly. 

Information  To  Be  Gathered 

In  a<ldition  to  the  quantity  or  number  of  items,  three 
other  classes  of  information  should  be  noted  for  each 
article  or  class  of  articles,  viz.,  ago  of  the  merchandise  or 
time  of  purchase,  cost  price,  and  selling  price.  When  the 
goods  were  bought  may  be  entered  by  figure  or  by  letter. 
In  mofh'TTi  prnf'tirc  it  is  customary  to  show  on  tho  price 


88  Befall  Store  Manayement 

tag  the  season  in  whicU  the  goods  were  a<l(led  to  stock. 
For  example:  The  letter  "A"  might  be  made  to  indicate 
this  season's  goods,  "B"  last  season's,  *'C"  goods  pur- 
chased last  year,  and  so  on.  Next  season's  goods  may  be 
marked  *'F"  or  some  other  letter.  These  letters  should 
be  called  off  and  entered  on  the  inventory  sheet  in  a  spe- 
cial column.  Figure  11  shows  a  model  inventory  sheet 
for  this  purpose. 

Where  goods  are  inventoried  at  selling  price  only,  as 
is  the  case  in  a  few  stores,  or  where  goods  are  inventoried 
at  cost,  a  special  column  is  sometimes  provided  for  each 
letter.  Thus  the  values  of  all  this  season's  goods  are 
placed  in  the  "A"  column,  goods  bought  and  added  to 
stock  last  season  have  their  values  listed  in  the  ''B"  col- 
umn, and  so  on,  as  shown  in  Figure  12.  At  the  close  of 
tlie  inventory  it  is  thus  an  easy  matter  to  find  the  amounts 
of  goods  on  hand  from  each  season.  The  inventory  thus 
points  out  in  black  and  white  the  departments  and  the 
lines  of  goods  in  which  an  undue  amount  of  merchandise 
is  staying  too  long  on  the  shelves  and  shows  that  some- 
thing must  be  done  to  clear  it  out. 

It  is  possible  to  provide  special  columns  for  the  letters 
representing  the  seasons  w^hen  both  cost  and  sales  values 
are  written  down,  but  a  double  column — one  for  costs  and 
one  for  sales — will  be  necessary  under  each  letter.  Many 
prefer  to  list  the  letters  in  a  special  column  and  judge  by 
inspection  the  amount  of  hangovers  from  past  seasons. 

The  traditional  inventory  was  always  taken  at  cost,  or 
if  the  selling  value  was  less  than  cost,  the  goods  were 
entered  at  the  reduced  figure.  The  modern  idea  is  to  list 
all  goods  at  both  figures.  The  double  listing  will  show 
not  only  the  value  of  the  merchandise,  but  also  the  amount 
of  profit  tied  up,  the  proportion  of  profit,  and,  from  this 
knowledge,  the  retailer  can  judge  what  he  must  do  to 


The  Inventory 


89 


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Retail  Store  Management 


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The  Inventory  91 

increase  his  business  and  what  he  can  do  in  competition. 
If  the  per  cent  of  mark-up  is  too  high,  this  ^^ill  be  re- 
vealed at  inventory.  If  the  retailer  knows  what  his  costs 
of  doing  business  are,  as  he  should,  he  can  tell  from  his 
inventory  how  low  he  can  safely  cut  his  prices  and  still 
be  safe. 

If  a  certain  line  is  found  to  have  moved  slowly,  he  can 
tell  whether  the  price  may  be  cut,  or  whether  the  goods 
should  receive  some  other  special  attention,  such  as 
change  of  location,  more  urgent  salesmanship,  or  special 
advertising.  These  are  some  of  the  valuable  features  of 
this  sort  of  inventory. 

How  To  Figure  Cost  of  Merchandise 

Practice  varies  on  what  is  to  be  taken  as  the  cost  of 
merchandise  in  inventorying.  A  few  merchants  take  the 
net  cost  price  of  the  goods  less  all  discounts  whether 
taken  or  not.  Others  take  the  net  price  paid,  in  this  case 
subtracting  only  such  discounts  as  are  taken.  Still  others 
take  the  billed  prices  and  disregard  the  discounts.  Some 
take  any  one  of  these  losses  and  add  all  expenses  incident 
to  laying  the  goods  on  the  shelves,  such  as  freight,  cart- 
age, storage,  and  so  on.  Nearly  all  reduce,  or  should 
reduce,  the  valuations  by  the  amounts  suffered  in  depreci- 
ation. One  cannot  say  that  any  one  of  these  methods  is 
scientifically  correct  and  the  rest  all  wrong.  For  certain 
purposes,  the  lulled  prices  of  the  goods  plus  the  expenses 
of  bringing  to  the  store  seems  the  best,  though  any  other 
might  be  utilized  if  followed  consistently.  Many  mer- 
chants til  ink  it  best  to  list  all  goods  at  billed  prices,  deduct 
the  average  cash  discount  received,  and  then  add  a  per- 
centage representing  the  average  cost  of  'Maying  down" 
the  goods  in  the  store. 

Certainly  transportation  on  goods  inward  bound  should 


92  Betail  Store  Management 

be  considered  as  a  cost  of  the  goods  and  so  treated  when 
the  goods  reach  the  store;  then  is  the  time  to  connt 
expenses  of  doing  business  in  addition  to  costs.  This  fine 
line  is  the  boundary  between  costs  and  expenses  in  a 
retail  store. 

Perpetual  Inventory 

The  common  inventory  reveals  the  exact  amount  of 
merchandise  on  hand  at  the  time  it  is  taken,  but  as  it  is 
taken  but  once  or  twice  a  year  in  most  stores,  for  months 
the  average  merchant  has  to  guess  at  just  what  he  has 
on  hand  and  how  the  various  parts  of  it  are  moving.  Six 
months  is  a  long  time  in  the  retail  business.  This  is 
enough  time  for  a  business  to  plunge  from  success  to  dis- 
aster. Many  complex  situations  may  arise  concerning 
which  the  merchant  has  no  definite  knowledge. 

To  remedy  the  evils  of  guessing,  the  perpetual  inven- 
tory was  invented.  Its  purpose  is  to  show  the  amount 
of  goods  on  hand  at  any  time.  It  has  a  long  and  inter- 
esting history  in  the  manufacturing  industries.  Here  it 
has  been  used  with  great  benefit  for  many  years.  It  is 
only  recently  that  retailers  have  learned  about  it  and  how 
to  apply  it  to  their  conditions. 

The  perpetual  inventory  is  tlie  basis  of  merchandise 
control.  It  shows  what  goods  are  moving  fast  and  what 
slowly.  It  therefore  indicates  what  goods  must  be 
pushed,  what  goods  should  be  reordered,  and  how  much 
may  be  reordered.  The  turnover  can  be  definitely  deter- 
mined while  business  is  going  on  instead  of  waiting  until 
the  end  of  the  season.  By  its  use  the  manager  can  guide 
his  business  profitwards  while  there  yet  is  time.  The  per- 
petual inventory  is  the  best  possible  sort  of  record  to 
have  and  to  use  in  insurance  adjustments  in  case  of  fire, 
flood,  tornado,  or  burglary. 


TJie  Inventory  93 

The  Ixdividual,  Stock  Record 

The  principle  of  the  perpetual  inventory  is  simple. 
Goods  on  hand  plus  goods  bought  less  goods  sold,  brought 
up  to  date  every  day  or  week,  shows  goods  on  hand.  The 
application  is,  however,  unfortunately  not  quite  so  sim- 
ple, due  to  the  fact  that  the  average  store  handles  a  great 
variety  of  goods  and  the  records  required  to  show  the 
above  for  each  item  would  require  too  much  time.  Then 
there  are  to  be  considered  returns  and  exchanges  of  mer- 
chandise, C.  0.  D.'s,  sales  on  approval,  goods  to  be 
returned  to  the  manufacturers,  etc. 

In  some  lines,  such  as  men's  and  women's  suits,  rugs, 
furniture,  and  other  lines  in  which  each  item  runs  up  into 
considerable  money  value,  it  is  not  only  possible  but  also 
practicable  to  keep  a  record  of  the  stock  in  such  detail  as 
to  show  just  Avhat  prices  are  on  hand  every  day  or  week. 

The  record  for  ladies'  suits  maybe  cited  as  an  example. 
Information  such  as  indicated  in  the  form.  Figure  13, 
would  be  recorded  in  the  perpetual  inventory. 

All  the  items  shown  on  the  left-hand  side  of  the  stock 
record  card  are  filled  in  for  each  garment  as  it  is  added 
to  stock.  The  information  on  the  right-hand  side  is  writ- 
ten in  as  the  sales  are  made.  Price  tags  are  made  out  so 
as  to  show  the  registry  number  as  well  as  the  size  and 
price.  AVhen  a  sale  is  made  the  price  tag  is  turned  in  with 
the  sales  slip.  From  the  former  the  proper  record  is 
located  by  tlie  jcgistry  number.  From  the  latter  the 
information  as  to  the  character  of  tiie  sale  is  transcribed 
to  the  stock  record. 

At  tiie  close  of  eacii  day's  Ijiisiiiess  a  report,  Figure  14, 
is  drawn  off  from  the  stock  record,  siiowing  the  items 
enumerated  in  tlie  report. 

At  the  end  of  each  montli  a  moiitiily  report  .similar  in 


94 


Retail  Store  Management 


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The  Inventory  95 

items  to  the  daily  report  is  drawn  up  but  showing  the 
profit  in  percentage  of  sales  as  well  as  in  dollars  and 
cents.  Many  specialty  shops  check  their  * '  stock  on  hand 
at  end  of  month  "  by  an  actual  inventory,  at  least  of  some 
departments  or  lines. 


DAILY  REPORT 

DATE 


At  Cost  At  Retail 

Stock  on  hand  at  beginning  of  day  

Purchases  added  to  stock  during  day  

Returns  to  stock,  exchanges,  and  approvals 

Sales  

Goods  sent  out  on  approval  

Stock  on  hand  at  end  of  day 

Profit  or  loss  on  day's  business  

Remarks  (Weather,  sales  conditions,  etc.) 


Fig.  11. — Daily  Report  Keeap  Stock  Record 

By  sample  tests,  selecting  line  at  random,  or  those  of 
which  there  may  be  some  doubt  as  to  accuracy  of  the  stock 
figures,  the  wliole  report  is  checked.  A  comi)lote  inven- 
tory once  every  tliree  months  or  at  least  at  the  end  of 
each  six  montlis  is  customary  among  tlie  best  stores. 

In  lines  that  run  uniformly  for  considerable  periods  of 
time,  where  fashion  changes  are  not  .'i])rnpt,  the  manu- 


96 


Retail  Store,  Manacjement 


factiirers'  stock  numbers  are  used  instead  of  the  com- 
plete descriptions  written  out  as  in  the  stock  record  given 
above.  A  rug  or  stove  stock  record  need  have  only  a 
few  columns.    A  good  form  is  illustrated  in  Figure  15. 

Each  rug  of  a  make  and  size  is  entered  as  one  (1)  and 
then  simply  checked  (X)  when  sold.  By  a  glance  at  the 
record  sheet,  the  dealer  or  buyer  can  tell  just  how  many 


RUG    STOCK     RECORD 

Size      ^x/^                                   Season  t'.*^.  /f/^ 

MFG.  NO. 

STOCK 

XXX\  1 1  1  1 

Fig.  15. — Eug  Stock  Record 


of  each  there  are  in  stock  and  how  many  have  been  sold. 

Various  other  stock  systems  are  in  use,  all  effective  and 
more  or  less  economical  in  the  time  required  to  keep  them 
up  to  the  minute.  The  principle  is  the  same  in  all  of 
them.  Stock  on  hand,  plus  purchases,  less  sales  reduced 
to  cost  price  of  goods  sold  yields  the  value  of  the  goods 
still  on  hand. 

In  many  departments  the  linos  of  merchandise  handled 
are  so  numerous  that  individual  stock  records  for  each 


The  Inventory  97 

line  are  probably  out  of  the  question.  This  statement  is 
made  with  the  qualification  "probablj^"  for  systems  are 
being  introduced  showing  exact  status  of  stock  in  nearly 
all  classes  of  stores.  The  great  chain  store  systems  sell- 
ing cigars,  groceries,  and  drugs  have  already  introduced 
stock  records  showing  in  detail  the  stock  on  hand  in  every 
line,  but  outside  of  such  concerns  this  type  of  record  keep- 
ing is  not  common. 


'& 


Perpetual  Ixventory  by  Statistics 

Department  stores  have  another  way  of  determining 
the  amount  of  stock  on  hand.  Their  method  is  sometimes 
called  the  "Statistical  Method." 

In  using  this  method  no  attempt  is  made  to  check  the 
sales  back  to  costs  for  each  item  sold.  The  total  sales  are 
simply  reduced  to  approximate  cost  value  by  subtracting 
a  certain  percentage  computed  to  be  equivalent  to  the  net 
markup  or  markon  of  the  goods. 

Let  us  suppose  that  the  average  net  markup  is  30  per 
cent.  If  the  sales  for  the  day  are  $500,  the  cost  value  of 
those  goods  will  equal  100  per  cent — 30  per  cent,  or  70  per 
cent  of  the  sales.  $500X.70i=$350,  cost  value  of  goods 
sold.  By  proceeding  according  to  the  general  principle 
of  the  perpetual  inventory,  goods  on  hand  plus  goods 
added  to  stock  less  sales  expressed  in  cost  values  as 
above,  equals  goods  on  hand  at  end  of  day,  week,  or 
month,  whichever  time  pciiod  is  used  in  marking  the 
computation. 

The  average  net  markup  is  found  as  follows:  At  the 
time  of  taking  the  rcguhir  inventory  the  goods  are  listed 
at  both  cost  and  selling  values.  The  difference  is  a  figure 
that  represents  the  markup  at  that  particular  time.  For 
example,  if  the  cost  value  of  the  mercliaiidise  in  a  depart- 


98  Retail  Store  Management 

mont  is  found  to  be  $7,000  and  the  sales  value  $10,000, 
the  markup  is  $3,000,  or  30  per  cent  of  the  sales. 

As  goods  are  added  to  stock,  the  selling  prices  are 
added  to  the  invoices,  so  that  for  every  invoice  the 
accounting  department  may  compute  tlie  markup  and  use 
it  in  averaging  the  markup  of  the  whole. 

But  goods  cannot  always  be  sold  at  the  marked  prices ; 
hence  there  must  be  markdowns.  Occasionally  goods 
appreciate  in  value  while  in  stock;  hence  they  may  be 
marked  up.  These  deviations  from  the  original  marked 
price  when  made  are  fully  reported  to  the  merchandise 
manager,  and  as  a  rule,  may  be  made  only  with  his 
approval.  The  accounting  department  notes  the  changes 
and  the  volume  of  goods  affected  and  subtracts  from  or 
adds  to,  as  the  case  may  demand,  his  merchandise  on 
hand  values. 

To  illustrate  the  method  let  us  express  it  in  formula. 

Inventory  at  sales  value  as  originally  found 
■j-  goods  purchased  at  sales  value 
+  total  markup  for  period  on  goods  in  stock 
—  total  markdowns 
=  stock  on  hand  at  sales. 

From  the  original  inventory  and  from  invoices  marked 
at  both  costs  and  selling,  the  average  per  cent  of 
markup  can  be  obtained,  also  the  amount  of  subse- 
quent markup  can  be  obtained.  The  amount  of  sub- 
sequent markup  will  form  a  certain  percentage  of  the 
whole  that  may  be  added  and  the  amount  of  markdowns 
likewise  a  certain  percentage  that  may  be  subtracted. 

To  illustrate:  The  original  markup  may  be  33i/}  per 
cent  of  sales  value.  Later  markups  raise  this  amount  to 
34  per  cent,  but  markdowns  may  follow  which  total  3  per 


The  Inventory  99 

cent  of  the  sales  value ;  lience  the  net  markup  will  be  31 
per  cent. 

To  find  the  cost  value  of  the  stock  on  hand  the  net  sales 
value  is  reduced  by  31  per  cent,  taking  the  percentages 
given  above. 

The  net  stock  on  hand  as  shown  by  the  statistical 
method  just  described  is  only  approximate.  The  reason 
for  this  is  that  the  percentages  used  are  merely  average 
percentages.  The  sales  for  any  day  or  week  may  be  only 
or  largely  in  goods  ^\'ith  low  markup  or  profit  margins,  or 
the  sales  might  in  other  cases  be  in  goods  with  higher 
than  average  margins.  In  either  case  using  the  average 
percentage  in  reducing  from  sales  values  to  cost,  values 
would  result  in  an  inaccuracy.  In  most  stores  the  tend- 
ency away  from  the  average  is  toward  business  with 
lower  profit  margins.  In  other  words,  the  goods  with  the 
low  profit  margins  move  more  rapidly  than  those  with 
high  margins.  The  actual  markup  in  such  instances  is 
of  course  less  than  the  average,  and  to  reduce  the  sales 
by  the  average  markup  results  in  getting  a  lower  than 
actual  total  of  costs  of  goods  sold.  It  will  appear  from 
the  resultant  cost  figures  that  the  goods  cost  less  than 
they  actually  did.  At  the  end  of  the  season  the  actual 
inventory  taken  then  will  vary  from  the  perpetual  inven- 
tor)^ figures  obtained  as  above  no  matter  how  carefully 
coraputod.  To  make  allowances  for  such  discrepancies 
some  stores  regularly  subtract  a  certain  percentage,  not 
usually  more  tlian  i/>  per  cent,  from  the  average  percent- 
age of  markup,  to  make  the  final  result  agree  with  the 
season  inventories. 

Care  must  be  exercised  at  all  places  in  tliese  computa- 
tions to  use  the  same  base  in  getting  at  percentages. 
Either  the  cost  or  the  first  marked  price  sliould  be  used. 
Of  the  two  the  writer  suggests  the  first  marked  price,  the 


lUU  Jh'lail  Shjic  Mauagenwnl 

selliiin'  price  as  first  marked,  as  the  best  base.  But  after 
having  selected  the  base,  no  changes  should  be  made,  or 
the  results  will  be  entirely  wrong. 

Merchandise  Control  by  Statistics 

Proper  merchandise  control  by  means  of  statistics 
requires  not  only  a  stockkoeping  system  that  will  show 
inventory  values  at  frequent  intervals,  but  also  accurate 
expense  statistics,  and  the  past  experience  of  the  store, 
if  any,  in  both  of  these  details.  From  his  knowledge  of 
past  sales  and  expenses  of  selling  for  each  department 
the  merchandise  manager  is  in  a  position  to  budget  his 
sales  and  expense  for  each  department  for  the  coming 
season  with  reasonable  accuracy  under  normal  conditions. 

Knowing  something  about  what  the  customers  of  his 
store  will  want  in  volume  of  merchandise  and  knowing 
the  past  expense  of  selling  similar  volumes,  the  merchan- 
dise manager  can  determine  in  advance  what  percentage 
of  markup  is  required  to  cover  the  costs  of  doing  business 
plus  the  desired  profit.  In  this  percentage  possible  mark- 
dow^us  must,  of  course,  be  considered.  A  quota  can  thus 
be  established  for  a  department  for  a  coming  season 
showing  sales  required,  average  percentage  of  markup, 
per  cent  of  markdown  to  be  allowed,  and  net  profit  de- 
sired. These  conditions  can  be  placed  before  the  buyer 
as  his  goal  to  work  for  or  to  exceed  if  possible. 

The  merchandise  manager  can  go  still  farther  in  out- 
lining his  merchandising  plan  by  showing  maximum  and 
minimum  limits  of  stock  to  be  carried  to  insure  the  proper 
turnover,  the  number  of  days  in  which  the  stock  should  be 
sold,  and  the  amount  of  stock  to  be  on  hand  at  the  end  of 
the  period. 

The  merchandise  plan  is  then  put  on  paper  for  each 


The  Inventory  101 

department  and  a  copy  given  to  tlie  buyer  of  each  depart- 
ment resx>ectively. 

Possible  contingencies  as  well  as  details  of  carrying 
out  the  plan  may  be  arranged  largely  in  conferences  with 
the  buyers,  either  singly  or  in  groups,  but  after  the  details 
are  settled,  the  buyer  may  be  held,  within  reasonable 
limits,  to  the  plan  as  outlined.  It  is  his  business  to  carry 
on  his  buying  and  selling  in  such  a  w^ay  as  to  fit  in  with 
the  plan. 

TEST  QUESTIONS 

1.  What  has  been  the  prevailing  practice  and  attitude  with 
regard  to  the  inventor}-  ? 

2.  Indicate  the  preliminar}'  preparations  that  siiould  be  made 
for  taking  inventory. 

3.  What  information  should  be  gathered  through  an  inven- 
tory? How  may  such  information  be  used  for  determining  mer- 
chandising policies  in  the  store  ? 

4.  How  should  the  cost  of  merchandise  be  figured  in  an 
inventory  ? 

5.  Under  what  circumstances  is  a  perpetual  inventory  prac- 
ticable ? 

6.  Explain  a  system  required  to  secure  a  perpetual  inventory 
through  individual  stock  records. 

7.  Explain  the  statistical  perpetual  inventory  plan.  What  are 
its  uses  and  limitations? 


CHAPTER  VIII 
buying  system 

Buyer's  Reports 

The  buyer  who  is  to  do  his  work  properly  needs  to  have 
certain  facts  about  his  business.  Some  of  these  facts 
should  be  provided  for  him  by  the  management.  Others, 
as  we  have  seen  in  another  chapter,  he  should  dig  up  for 
himself. 

"We  have  just  noted  in  the  preceding  chapter  that  the 
buyer  should  be  provided  with  a  copy  of  the  merchandis- 
ing plan  for  the  coming  season  by  the  merchandise  man- 
ager, at  least  that  part  of  it  applying  to  his  department. 
In  the  small  store  where  the  buyer  is  also  the  manager  of 
the  store,  he  can  work  out  his  own  plan  and  prepare  his 
own  statistics,  but  in  the  large  store,  most  of  the  figures 
will  be  provided  for  the  buyer.  His  own  record  keeping 
will  be  mainly  in  keeping  track  of  stock,  the  department 
perpetual  inventory,  making  notes  and  records  of  popu- 
lar wants,  recording  names  of  sources  of  supply,  prices, 
discounts,  terms,  etc. 

The  buyer  should  have  prepared,  or  shoukl  have  placed 
before  him,  every  morning  a  summary  of  the  business  of 
the  day  before  in  his  department,  the  total  sales,  and  the 
sales  of  each  salesperson  classified  into  cash,  credit, 
C.  0.  D.'s,  approvals,  and  exchanges.  Figure  16.  The 
returns  and  allowances  claimed  should  likewise  be  noted. 

102 


Buying  System 


103 


DAILY  SALES  REPORT; 

DATE              1Q1 
DEPARTMENT 

'WEATHER 

1 

Clerk  No. 

Cash 

C.  O.  D. 

Charge 

Exchange 

Refunds 

^^       ^ 

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Totals 
Less  Exch 

Final 

Previous  Ye* 

ir's  5^Alf•<; 

Wp;ithpr 

I'lG.  IC— J)ally  Sales  Keport  to  liu^'cr 


104 


Retail  Store  Management 


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Buying  System  105 

111  parallel  columns,  tlie  iigures  for  the  same  day  of  the 
preceding  year  should  also  be  given,  if  possible,  so  that 
the  buyer  maj^  note  not  only  his  progress  from  day  to  day 
but  also  from  year  to  year.  The  information  outlined 
above  will  guide  the  buyer  in  directing  his  sales  force  and 
sales  plans,  and  indirectly,  his  buying. 

More  directly  the  buying  will  be  guided  by  the  records 
showing  the  department  sales  in  past  years,  sales  of  the 
present  season  to  date,  how  much  of  the  season  remains, 
the  amount  of  stock  on  hand,  the  amount  of  stock  ordered, 
yet  to  come,  but  not  received,  Figure  17.  The  buyer  must, 
of  course,  be  guided  constantly  hj  the  limits  placed  upon 
him  by  the  merchandise  plan. 

Handling  Purchase  Orders 

There  should  be  a  definite  system  of  handling  the  pur- 
chase orders  to  avoid  duplications  and  overbuying,  and 
to  save  time  in  looking  up,  at  any  time,  the  amount  of 
goods  ordered  but  not  yet  arrived. 

There  should  be  a  written  order  for  all  goods  ])ur- 
chased.  No  verbal  orders  should  be  permitted  in  the 
retail  business.  Orders  by  telephone  and  telegram  should 
be  confirmed  in  writing  at  once  and  marked.  ''Duplicate 
confirming  wire  order."  Orders  should  be  made  out  on 
the  store's  stationery.  No  matter  how  small  the  store 
this  may  be  carried  oat  with  profit. 

A  departmentalize(l  store  siiouhl  iiave  a  separate  oi'der 
l)()ok  for  every  department.  Goods  for  two  or  more 
departments  shouhl  be  ordered  on  blanks  from  those 
departments  iii\  jiiiably. 

Tlie  order  blanks  sliould  bo  made  out,  at  least  in  dupli- 
cate, better  still  in  tii plicate,  by  means  of  carbon  sheets. 
The  originjd  shouM  he  given  to  Hie  sliipf)er,  one  copy 
should  be  kept  l)y  the  buyer  in  llie  departmenl,  and  the 


106  Retail  Store  Management 

third  copy  should  go  to  the  merchandise  manager  and 
thence  to  the  office.  Every  order  should  be  consecutively 
numbered  and  should  come  to  the  office  in  the  order 
numbered. 

In  large  stores  it  is  a  rule,  and  a  good  one,  that  pur- 
chases above  a  certain  amount  must  be  confirmed  by  the 
sig-nature  of  the  merchandise  manager.  It  can  readily 
be  seen  that  the  purpose  of  these  confirmations  might  be 
nullified  if  orders  were  not  promptly  sent  in  to  the  office 
in  the  order  received.  In  most  cases  a  purchase  order 
out  of  its  consecutive  order  will  not  be  received  at  all 
without  explanation. 

Purchase  Records 

A  record  is  made  of  the  order  in  the  bookkeeping 
department  showing  date  placed,  number  of  order  and 
amount,  department  classification  according  to  time  goods 
are  to  be  delivered,  total,  and  general  remarks.  After 
this  record  is  made,  the  order  is  filed  to  await  the  time 
when  the  invoice  appears.  Cancellations  made  in  the 
meantime  are  recorded  both  on  the  order  duplicate  and 
in  the  office  record  described  above,  generally  in  red  ink. 

When  the  invoice  arrives,  it  is  first  checked  against  the 
duplicate  order  in  the  office  to  catch  shortages,  partial 
shipments,  or  unauthorized  shipments.  Prices  and  terms 
are  compared  and  then  the  order  is  permanently  filed  in 
the  office. 

The  invoice  is  sent  to  the  shipping  room  to  be  used  in 
checking  the  incoming  goods.  Some  concerns  have  the 
part  of  the  invoice  containing  the  column  that  shows  the 
quantity  of  goods  ordered  clipped  off  and  require  that 
the  receiving  department  must  count  and  list  the  quan- 
tities of  all  goods  received.  This  prevents  the  receiving 
clerks  from  being  careless  in  checking  the  quantity  as 


Buying  System, 


107 


THE 
BUYER 


Buyer  Fixes  Prices 


Invoice  Recorded,, Filed, 


INFORMATION 


£ 


Merchandise  Plan 

from 
Merchandise  Mgr 


BUYING 
SYSTEM 


Popular  Wants 
Quality 
Slyles 
Price 

Quantity 


Order  Blanks 
No.  Consecutively 
Triplicate 


Stock  Records  and  Inventories 
Daily  Classified  Sales  Reports 
Comparisons  with  Past  Years 


/< 


Buyers 
Files 


Sourcesof  SunplyCatalogs 

Quality   Obioinablo 
Prlcet  Supply  Available 
Discounts  Trnniportalion 
Term*  Market  TendcnclM 


I 


3 
o 

c 

3 


c 


n 

D. 


1^ 


I' 

en 

n> 


S'r 


^c- 


Merchandise 
Manager 


A 


Shipper 


1  J 


General  Office 
Bookkeeping 
Records 


CooHd    J  ^  Shipping  and 
bhippi-d'  Receiving  Konn 


ccciving  Konm 
Invoice  Checked 


L J 


Fig.  18. — nmrt   Showiiif,'  SystcMii  in  ri   I'.iivcr's  OHico 


108  Retail  Store  Management 

given  on  the  invoice  as  correct.  After  the  invoice  is 
returned  to  the  office  the  clipped  column  is  checked  ^dth 
the  receiving  clerk's  figures  and  again  attached. 

Before  returning  the  invoices  to  the  office  from  the 
receiving  room,  the  buyer  notes  after  each  item  the  sell- 
ing price  to  be  marked  on  the  merchandise.  The  selling 
prices  thus  marked  become  the  base  for  all  computations 
following,  such  as  percentages  of  expense,  markdown, 
profits,  etc.,  in  all  stores  that  have  adopted  the  selling 
price  as  the  base  system.  It  is  from  these  invoice  prices, 
costs,  and  selling  that  the  merchandise  manager  gets  his 
foundation  for  his  perpetual  inventory  already  described. 

A  record  is  usually  made  of  each  invoice  received  show- 
ing date  order  was  entered,  date  invoice  was  received,  its 
number,  the  name  and  address  of  the  firm,  the  amount, 
terms,  discounts,  net  amount  to  be  paid,  when  paid, 
department  selling  price,  and  markup  percentage. 

The  invoices  themselves  are  generally  filed  in  a  pur- 
chase journal  and  the  amounts  posted  to  the  merchandise 
account  in  the  general  ledger.  The  chart  on  the  preced- 
ing page.  Figure  18,  shows  the  general  procedure  in  a 
buyer's  office. 

TEST  QUESTIONS 

1.  What  are  the  buyer's  chief  sources  of  merchandising  infor- 
mation? 

2.  How  and  in  what  form  does  he  get  his  merchandising 
statistics? 

3.  Outline  a  policy  for  handling  purchase  orders. 

4.  Explain  the  records  required  for  the  buyer's  work. 

5.  Trace  the  complete  history  of  a  purchase  of  goods. 


CHAPTER  IX 
sales  system 

The  Sales  Slip 

The  sales  slip  is  the  fundamental  record  of  the  sales  sys- 
tem. Accuracy  in  amounts  and  proper  classification  are 
the  factors  most  desired.  Economy  of  time  and  labor  in 
preparing  them  follows  closely. 

The  sales  slip  in  most  general  use  measures  7  by  3% 
inches.  It  is  generally  made  out  in  duplicate  by  means 
of  a  carbon  sheet,  and  a  triplicate  form  is  gaining  favor 
with  many  concerns.  The  third  copy  is  a  tissue  paper 
sheet  that  is  attached  to  the  sales  book  and  not  removed. 
It  serves  in  case  of  loss  of  the  original,  and  it  is  also 
claimed  that  its  use  makes  dislioncsty  more  difficult. 

The  usual  information  on  the  sales  slip  includes  blanks 
for  tlie  customer's  name  and  address  to  be  used  in  case 
of  delivery  or  in  case  of  charged  goods,  date,  number  of 
salesperson  and  of  inspector  if  inspection  forms  a  part 
of  tlie  store  system,  sliowing  the  kind  of  sale,  whether 
cash,  fliarge,  C.  O.  D.,  approval,  etc.,  descrii)tion  of  the 
merchandise,  amount  of  sale,  amount  of  money  received 
from  customer,  and  the  number  of  the  sales  slip.  A  typi- 
cal form  of  such  a  sales  slip  is  shown  in  Figure  19. 

In  an  ordinary  transaction,  the  original  is  usually  kept 
by  the  cashier  as  the  store's  record;  the  duplicate  is  sent 
with  the  goods;  ;ind  the  triplicate,  when  used,  is  kept  by 

100 


COLUMBIA  CLOTHING  CO. 

DULUTH  and  SUPERIOR 

SPELL  NAME  CORRECTLY  AND  GIVE  FIRST  NAME  IN  FULL.  UNLESS 
REGULAR  ACCOUNT,  FILL  IN  ALL  THESE  LINES.  FOR  CASH  SALE 
USE   LOWER    PART  OF  SLIP  ONLY. 


2828, 


^Superior,  Wis _: 


..^191.. 


NAME 


ADDRESS 


BUSINESS. 


AGREES  TO  PAY  ON 


GOODS  PURCHASED  BV . 


SALESMAN 

O.  O.  D 

CHARGE 

CASH 

SALE 

SALE 

SALE, 
AM'T 
REC'D 

LOT 

NO. 

ARTICLES 

AMOUNT 

^ „ 

— 

-.^ 

Q^ 



Si 

CHECKER 

NO _ .- 

NO  exOHANOE   OR   REFUND  WITHOUT 
THIS  SLIP 

CHARGE 

OK'D  BV                                                   1 

ffOI  lO                  ....... 

-, 

r 

Fig.  19. — Simjile  Sales  Slip 


Sales  System  111 

tlie  salesperson  in  the  sales  book  and  turned  into  the 
auditing  department  ^Yhen  the  book  is  used  up. 

The  duplicate  is  usually  wrapped  with  the  merchandise. 
In  case  that  the  customer  pays  cash  and  wants  the  goods 
delivered,  a  receipt  is  usually  given  in  the  form  of  a  slip 
printed  and  attached  to  the  base  of  the  regular  sales  slip. 
This  slip  gives  amount  of  sale,  salesperson's  number, 
inspector's  number,  number  of  sales  slip,  date,  and  cash- 
ier's stamp  showing  that  payment  has  been  received. 

One  of  the  best  forms  of  sales  slips  for  large  store  use 
is  one  that  has  three  parts  on  its  face,  each  part  perfor- 
ated so  that  it  may  be  separated  from  the  rest,  Figure  20. 
The  address  label  to  be  used  in  case  the  goods  are  to  be 
delivered  is  placed  at  the  top  and  filled  out  only  when 
needed.  In  the  center  is  the  regular  sales  slip  with  places 
for  names  and  address  in  case  of  a  charge  sale,  descrip- 
tion of  goods,  kind  of  sale,  etc.  At  the  bottom  there  fol- 
lows the  part  kept  by  the  cashier  as  a  voucher  and  the 
carbon  of  which  is  used  as  a  receipt  in  case  of  goods  to  be 
delivered  and  paid  for  in  advance.  Each  part  has  the 
number  of  the  sales  slip  printed  on  it  and  the  number 
of  the  salesperson. 

Cash  on  clolivery  sales  are  usually  handled  as  follows : 
The  sales  slip  is  made  showing  merchandise,  amount,  and 
address  of  the  customer,  togetlier  with  the  identifying 
numljers  mentioned  for  other  sales  slips.  The  propct 
bhnik  showing  tl)(?  kind  of  sale  is  marked  C.  0.  D.  The 
original  is  kept  by  the  cashier  as  in  other  cases,  and  the 
duplicate  is  sent  with  the  merchandise  to  tlie  C.  O.  D. 
desk.  Here  tlie  slip  is  pasted  on  a  C.  0.  D.  label  and 
this  tied  to  tlie  package.  Next  a  record  is  made  on  the 
delivery  sheet,  and  when  tlie  driver  takes  the  package 
out,  he  must  bring  back  eitlier  the  package  or  the  money, 
and  the  fact  in  either  case  is  noted  on  the  delivery  sheet. 


112 


Retail  iSture  Management 


36022  E 
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Alwaxs  R«p»a4  Nicm< 


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37 


(;tj>MTrry 


Customers  3hoi!l( 
dum.  Its  presentat 
ing  goods  for  exchan 
and  delay. 


36022  E 
37 


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lllU>OKUm,-NBW    YORK 


(Nam*) 


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Customers  buying  in  jnor*  4han 
tonc  dcparimcn*  will  s&ve  iime 
,X>y  u^ifi]}  a  TrBnsfvr  and  tf>surr 


Alwa^a  Bapaat  Name  and  Addrcaa  to  Coatomar.    Writ*  l^lalnlr 

.Bought  by 


FW 


Send  to. 


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Total 


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AM'T  or  SALC 


Never  Dcilroy  a  Check.  Have  ii  voided  by  proper  Authority 


36022 


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Fig.  20.— Multiple  Sales  Slip 


Sales  System  113 

The  Various  Kinds  of  Transactions 

Tliere  are  a  great  variety  of  transactions  to  be  recorded 
on  sales  slips  about  which  we  need  not  go  into  detail  here. 
For  example :  Transactions  may  not  only  be  pure  cash, 
charge,  or  C.  0.  D.,  but  also  part  cash  and  part  credit, 
part  cash  and  part  C.  0.  D. ;  delivery  at  a  certain  date 
may  be  bought  by  one  party  and  delivered  to  another, 
bought  by  one  party  and  charged  to  another,  etc.  The 
store  system  will  have  a  definite  plan  of  handling  every 
such  case,  the  principle  of  which  involves  nothing  differ- 
ent from  what  has  already  been  given. 

At  the  end  of  the  day  each  salesperson  turns  in  to  the 
head  of  the  department  a  summary  of  sales  classified  as 
cash,  charge,  and  C.  0.  D.,  made  up  from  a  record  of 
every  transaction  on  a  card  at  the  back  of  the  sales  book. 
The  head  of  the  department  reports  the  total  for  each 
salesperson  and  for  the  department.  From  these  the 
manager  of  the  store  can  tell  shortly  after  the  closing 
hour  just  what  the  business  has  been  during  the  day. 
Salespeople  frequently  make  errors  in  their  additions, 
lience  errors  creep  into  these  totals;  but  it  gives  a  line 
on  the  results  that  may  be  used  until  the  auditing  depart- 
ment has  completed  its  work  the  next  day. 

Inspf-ction 

Rome  stores  have  all  Sides  inspected;  others  do  not 
think  it  worth  wliile.  Tlie  tendency  is  toward  inspection. 
Usually  the  cashier,  where  one  is  em])loyed,  is  also  the 
inspector  and  \vra])f)er,  but  not  always.  A  cashier-inspec- 
tor can  care  for  the  merchandise  and  cash  of  about  eight 
to  ten  salespeople.  Wlieii  rashiers  are  helpe<l  by  an 
ins})ector-wrapper,  the  number  of  salespeople  per  inspect- 
ing station  may  be  doubled.     Tlic  objects  of  inspection 


11-4  Retail  Store  Management 

are  to  note  whether  the  merchandise  agrees  in  quality, 
(juantity,  and  kind  with  the  description  on  the  sales  slip, 
to  see  if  the  goods  are  free  from  imperfections,  to  see  if 
the  address  is  clearly  written,  and  the  figures  totaled  cor- 
rectly. In  short,  the  inspection  system  is  intended  to 
prevent  mistakes  of  any  kind,  including  dishonesty. 

The  Cashier  System 

The  work  of  the  cashier  is  obvious,  viz.,  to  receive  cash, 
make  change,  and  stamp  sales  slip  paid.  Each  cashier  is 
provided  with  her  own  till,  and  when  cash  registers  are 
used,  with  a  die  that  stamps  her  number  on  sales  clips. 

On  starting  work  the  cashier  is  provided  with  a  certain 
amount  of  change,  amounting  to  from  ten  to  twenty  dol- 
lars. At  the  close  of  her  work  she  turns  in  the  money 
with  this  amount  of  change  kept  in  a  separate  canvas  bag. 
The  proceeds  of  the  sales  taken  in  are  made  up  into  coin 
parcels  showing  contents  of  each,  and  a  report  is  made 
with  the  cash  as  it  is  turned  in,  till  and  all,  to  the  head 
cashier.  This  report  shows  ''Balance  held  to  serve  as 
change,"  currency,  gold,  silver,  checks,  refunds  paid  out, 
total  cash  turned  in,  and  number  of  voided  sales  clips. 
At  the  end  of  the  report  the  cashier  signs  her  name. 

The  money  is  then  recounted  by  the  head  cashier,  and 
a  report  is  made  out  showing  cash  from  each  cashier. 
The  cashier's  till  with  the  bag  of  change  is  placed  in  a 
safe  until  the  morrow. 

The  report  of  the  head  cashier  must  agree  with  that  of 
the  auditor's  totals  from  the  sales  slips.  If  any  discrep- 
ancy occurs,  an  investigation  is  made  to  determine  the 
reason  and  responsibilit}^  for  the  error. 

Auditing  System 

The  purpose  of  the  auditing  system  is  to  check  every 
sales  slip  and  make  totals  for  departments  and  for  indi- 


Sales  System  115 

vidual  salespeople,  sho\\T.ng  actual  sales,  cash  receipts, 
charges,  C.  0.  D.  's,  and  other  transactions. 

The  sales  slip  originals  are  turned  in  by  the  cashiers  to 
the  auditor,  and  the  cash  is  turned  in  to  the  head  cashier. 
The  head  cashier  totals  the  cash,  the  auditor  totals  the 
sales  slips,  and  the  two  siiould  agree  on  cash  received  by 
the  store.  If  there  is  a  difference,  the  slips  are  checked 
over  indi\idually  in  the  order  of  their  numbers.  Since 
all  sales  slips  are  consecutively  numbered,  all  must  be 
accounted  for.  Salespeople  are  not  permitted  to  throw 
away  any,  even  if  errors  are  made  that  cannot  be  passed. 
Such  sales  slips  are  marked  "void"  by  the  floor  manager 
and  turned  in  with  the  sales  slip  at  the  end  of  the  day. 

Stores  that  use  cash  registers  with  an  adding  machine 
attachment  use  the  totals  from  the  registers  as  a  third 
source  of  information  on  cash  taken  in. 

After  the  cash  has  been  audited,  the  next  step  is  the 
auditing  of  sales  for  each  department  and  finally  for  each 
salesperson  in  the  department.  The  sales  slips  are  first 
assorted  according  to  departments ;  or  if  the  store  is  fully 
departmentalized,  each  salesperson  selling  in  only  one 
department,  the  department  sales  slips  will  be  found  all 
together  as  they  come  from  the  cashiers.  The  one  excep- 
tion to  this  in  all  stores  is  due  to  the  use  of  ''transfers." 
By  means  of  the  transfer  sales  slip,  the  customer  can  buy 
from  one  department  to  another  without  being  troubled 
witii  making  settlement  until  all  goods  desired  have  been 
obtained.  Each  salesperson  who  serves  the  customer 
makes  the  appropriate  entries  on  the  card  for  the  goods 
purchased  in  the  d('])artTnent.  In  some  of  the  largest 
stores  the  transfer  card  is  provided  witli  several  sheets, 
each  to  be  fille<|  out  in  dnplicatc,  the  original  left  attached 
to  tlie  card  and  lln'  duplicate  torn  out  and  sent  with  the 
goods   to   the   wrapping  department.     In   any  case   the 


116  Retail  Store  Management 

transfer  sales  slips  or  cards  are  classified  accordini^  to 
departments  by  the  auditing  department. 

After  the  totals  for  each  department  are  determined, 
the  sales  slips  are  next  classified  and  totaled  for  each 
salesperson.  In  this  way  a  check  is  obtained  on  the  sales- 
person's own  record  of  his  or  her  own  sales  as  entered  in 
the  index  or  card  kept  in  the  back  of  each  salesperson's 
sales  book. 

Charge  sales  slips  and  C.  0.  D. 's  are  likewise  totaled 
and  added  by  departments  and  for  each  salesperson. 

Missing  sales  slips  are  hunted  up,  returns  from 
C.  0.  D.  's  are  checked,  and  partial  pajTnents  on  goods  to 
be  delivered  later  are  noted.  In  short,  totals  are  found 
and  verified  for  all  the  classes  of  sales.  Following  this, 
the  reports  of  the  auditing  department  become  the  figures 
of  record.  General  manager,  merchandise  manager, 
buyer,  and  superintendent  of  salespeople  get  the  reports 
they  need  from  these  figures. 

Credit  S.u.es  System 

When  a  customer  asks  for  credit,  the  first  step  is  always 
an  introduction  to  the  credit  manager.  The  latter  gets 
certain  information  from  the  customer,  such  as  name, 
address,  occupation  of  husband  or  of  breadwinner,  place 
of  business,  number  of  years  at  present  residence,  pre- 
vious residences,  and  references.  This  information  is 
usually  written  down  on  a  blank  called  an  '*  Application 
for  Credit." 

Following  this  preliminary  visit  in  which  the  credit 
manager  gains  all  the  information  possible  in  a  tactful 
way  and  forms  an  impression  of  the  desirability  of  the 
applicant  as  a  credit  customer,  the  manager  begins  an 
investigation  by  writing  the  references,  looking  up  the 
ownership  of  property  claimed  by  the  applicant,  previous 


Sales  System  117 

credit  reputation  with  other  dealers  formerly  dealt  with, 
and  several  other  sources,  if  thought  necessary,  such  as 
employers  of  the  breadwinner,  pastor  of  church,  and  even 
nearby  neighbors.  Standing  in  the  communit}'  is  con- 
sidered. Past  record  for  paying  bills  is  highly  important, 
and  in  manv  cities  this  information  is  obtainable  from 
local  credit  associations.  Steadiness  of  income  is  like- 
wise all-important. 

Next  a  certain  limit  is  placed  upon  the  amount  of  credit 
to  be  granted.  A  normal  expenditure  for  the  various 
lines  of  merchandise  is  known,  for  classes  of  people  mth 
different  amounts  of  income,  and  the  credit  line  or  limits 
usually  approximates  these  normal  amounts. 

Having  a  credit  footing  established,  the  customer  is 
then  in  position  to  buy  goods  on  account. 

When  the  customer  appears  at  the  counter  and  asks  to 
have  goods  charged,  the  usual  routine  consists,  first  of 
identification,  and,  second,  of  authorization.  In  small 
stores  in  small  towns  it  may  be  easy  for  salespeople  to 
recognize  the  customer,  but  in  large  stores  where  sales- 
people cannot  possibly  know  all  customers,  some  method 
is  required  to  make  sure  that  the  customer  is  who  she 
says  she  is.  The  floor  manager  often  knows  the  cus- 
tomers better  than  the  salespeople,  and  ho  may  identify 
the  customer.  An  impostor,  if  brought  before  the  floor 
manager  would  be  likely  to  show  some  signs  of  guilt,  and 
the  floor  manager  is  keenly  observant  of  such  things  when 
he  does  not  feel  absolutely  certain  about  the  customer's 
identity. 

Most  largo  stores  use  a  system  of  cards  or  coins,  one 
of  which  is  given  to  each  customer  when  the  account  is 
opened  with  instructions  to  show  it  to  th(!  salesperson 
when  wishing  to  buy  for  credit. 

After  the  customer  is  identified,  llic  charge  sales  slip 


118  Retail  Store  Management 

is  next  sent  by  tube  or  carrier  system  to  the  credit  author- 
ization department;  or  a  telephone  system  is  used  by 
which  the  salesperson  gets  in  direct  touch  with  the  credit 
authorizes  The  credit  authorizer  gets  the  name,  address, 
and  amount  of  the  sale.  He  then  turns  to  his  file  of 
accounts  and  quickly  finds  the  record  of  the  customer's 
account  and  determines  whether  the  amount  of  credit 
desired  is  within  the  limits  fixed  by  the  store.  If  so, 
approval  is  stamped  on  the  sales  slip  if  tube  system  is 
used,  or  by  means  of  an  electrical  stamping  device,  if  a 
telephone  system,  and  the  sale  is  completed. 

Immediate  authorization  by  telephone  or  tube  is  neces- 
sary, of  course,  only  when  the  customer  desires  to  take 
the  goods  bought  with  her.  In  other  cases  where  delivery 
is  to  be  made,  an  authorizer  takes  care  of  the  matter  in 
the  shipping  room.  If  the  credit  Umit  is  exceeded,  the 
goods  are  held  up  and  a  letter  sent  to  the  customer  telling 
her  tactfully  that  the  credit  limit  has  been  reached  and 
desiring  an  interview.  When  authorization  fails  over  the 
telephone  or  through  the  tube  system,  w^hen  the  customer 
desires  to  take  goods  with  her,  the  salesperson  asks  the 
customer  to  come  to  the  credit  office. 

All  these  matters  have  to  be  handled  very  tactfully, 
for  the  average  customer  is  very  sensitive  upon  such  a 
matter  as  credit.  The  store  cannot  afford  to  lose  any 
good  customer,  hence  the  care  necessary  in  handling  every 
individual  case. 

To  make  authorization  effective  as  a  means  of  checking 
customers  from  ovorbujang  their  limits,  all  charges  are 
posted  to  the  authorizer 's  records  daily.  Some  stores 
have  systems  that  show  distinctive  signals  for  all  accounts 
that  are  approaching  the  limits. 

The  usual  authorization  desk  record  of  customers  is 
a  card  index  file,  each  authorizer,  if  more  than  one,  having 


Sales  System  119 

charge  of  all  customers  whose  names  begin  with  certain 
letters.  Another  device  in  frequent  use  is  a  vertical  stand 
with  swinging  boards  containing  slots  into  which  slips 
sho\\dng  names  and  addresses  of  customers,  together 
with  their  credit  limits  and  amounts  of  present  indebted- 
ness, are  placed.  The  names  are  arranged  alijhabetically 
and  may  be  found  in  a  very  short  space  of  time. 

Some  stores  have  a  rule  that  authorization  is  not  neces- 
sary even  if  customers  d6sire  to  take  the  goods  bought 
with  them  at  once,  if  the  amount  is  less  than  some  arbi- 
trary sum  such  as  five  dollars.  All  that  is  necessary  for 
amounts  less  than  this  is  the  identification  by  card,  coin, 
or  by  acquaintance  with  salesperson  or  floor  manager. 

TEST  QUESTIONS 

1.  Why   is   the   sales   slip   of   especial    importance    in    store 
accounting? 

2.  AVhat  information  should  be  listed  on  a  sales  slip  ? 

3.  How  are  the  various  parts  of  multiple  sales  slips  handled 
and  used  ? 

4.  Outline  an  inspection  system  for  checking  sales. 
.5.  Describe  the  cashier's  system. 

6.  Explain   exactly  how   sales   are   audited.     What   are   the 
sources  of  information  and  the  checks? 

7.  What  steps  should  he  taken  in  authorizing  charge  accounts? 

8.  What  i)i formation  is  usually  kept  in  the  credit  office  regard- 
ing charge  customers? 

9.  TTow  are  charge  purchases  handled  in  the  store  after  an 
account  has  been  opened  ? 


CHAPTER  X 

EFFICIENCY   IN    THE    RECEIVING    DEPARTMENT 

Goods  received  from  suppliers,  either  manufacturers  or 
wholesalers,  should  be  handled  systematically  as  they 
come  into  the  store.  Some  system  is  better  than  no 
system,  but  there  are  great  differences  in  the  practica- 
bility of  various  systems  for  various  businesses.  The  fol- 
lowing suggestions  are  not  intended  to  outline  a  system 
but  rather  to  help  the  buyer  or  store  manager  in  devel- 
oping his  own  system. 

How  To  Open  Cases 

There  is  an  art  in  opening  boxes  and  barrels  just  as 
there  is  an  art  in  doing  up  packages ;  and  not  everyone 
who  does  this  work  is  doing  it  as  it  should  be  done. 
Barrel  heads  should  be  pried  open  and  not  driven  in. 
Driving  them  in  is  likely  to  damage  goods  within.  Boxes 
should  be  opened  with  nail  pullers  in  such  a  way  as  to 
prevent  the  breaking  of  the  covers.  Boxes  made  of 
lumber  are  valuable  to-day  and  should  be  cared  for  and 
disposed  of  to  some  financial  advantage.  Always  open 
cases  or  boxes  from  the  top. 

It  is  a  good  plan  to  open  only  one  case  at  a  time.  All 
the  packing  material  should  be  saved  until  the  invoice 
is  checked.  Losses  due  to  goods  hidden  in  the  packing, 
paper,  or  excelsior  are  common.  The  goods  from  the 
oases  when  unpacked  should  be  laid  on  a  counter  in  regu- 

120 


Efficiency  in  the  Receiving  Department         121 

lar  order  so  as  to  make  it  easy  to  check  them.  A  good 
deal  of  time  may  be  saved  by  having  appropriate  floor 
and  counter  space  in  which  the  unpacking  may  be  done. 

How  To  Check  Merchandise 

The  next  step  is  checking  mth  the  invoice.  In  small 
stores  the  invoice  sent  by  the  manufacturer  may  be  used, 
but  if  the  unpacking  is  done  by  an  employee,  and  there 
is  a  good  deal  of  it  to  do  all  the  time,  a  better  plan  is 
to  have  the  checking  done  on  a  blank  invoice,  one  with 
the  list  of  items  but  without  the  figures  showing  quan- 
tity ordered.  The  checker  then  must  carefully  count  the 
goods,  and  his  count  is  compared  in  the  office  with  the 
supplier's  invoice.  A  simple  device  used  among  some 
small  merchants  is  to  clip  the  invoice  in  two' at  the  line, 
di\dding  quantity  from  the  names  of  the  items  and  then 
fastening  the  prices  together  again  after  the  checking. 

Shortages,  breakage,  bad  order,  goods  below  stand- 
ard, mistakes,  or  substitutions  should  be  noted  in  the 
checking  and  the  matter  attended  to  from  the  office  as 
soon  as  possible.  Adjustments  are  always  easier  to 
secure  and  are  generally  more  satisfactory  when  called 
for  immediately. 

Inspection  and  Testing 

Inspection  of  goods  by  simple  scientific  and  practical 
tests  is  often  desirable.  At  small  expense,  for  example, 
the  average  dry  goorls  store  can  equip  itself  to  make 
its  own  textile  tests,  especially  for  those  qualities  that 
customers  arc  most  interested  in  knowing  about.  A 
truthful  answer  based  on  actual  knowledge  carries  con- 
viction and  may  swing  the  sale.  The  following  are  some 
of  the  questions  that  the  dry  goods  salesman  should  be 
able  to  answer  from  his  own  knowledge  of  the  goods : 


122  Retail  Store  Management 

1.  Will  the  colors  fade? 

2.  Does  the  wool  or  worsted  cloth  contain  cotton? 

3.  Is  the  linen  pure? 

4.  Is  the  silk  pure  or  truef 

5.  Is  the  silk  weighted  or  loaded? 

EQUIPMENT  NEEDED 

In  order  to  be  certain  about  the  qualities  in  the  lines 
suggested  above,  tests  must  sometimes  be  made.  Most 
of  such  tests  can  be  made  easily,  if  the  materials  needed 
are  at  hand,  and  if  a  little  time  is  taken  for  doing  the 
work.  The  following  equipment  will  prove  very  service- 
able for  any  dry  goods  store  or  dry  goods  department: 

1.  A  small  but  powerful  magnifying  glass  called  a 
"linen  tester."  With  this  glass,  after  a  little  practice 
on  known  goods,  one  can  distinguish  the  difference  be- 
tween cotton,  silk,  and  w^ool  fiber.  Such  a  glass  is  a  great 
help  to  the  eye. 

2.  Samples  of  different  kinds  of  laundry  soap. 

3.  An  alcohol  lamp  or  other  means  of  heating  water 
or  solutions  to  the  boiling  point. 

4.  Several  glasses  in  which  the  solutions  can  be  pre- 
pared and  heated  over  the  alcohol  lamp  or  other  heating 
apparatus.  In  the  laboratories  a  very  thin  glass  is  used, 
shaped  like  a  tube,  closed  at  one  end,  and  rather  long. 
These  glasses  are  called '  '■  test  tubes. ' '  They  are  very  con- 
venient and  should  be  obtained  if  convenient  to  do  so. 
One  dozen  three-quarter  inch  test  tubes  will  be  sufficient 
for  many  tests.  Care  must  be  taken  to  keep  these  glasses 
or  tubes  clean.  All  tests  should  be  made  in  clean  appa- 
ratus. 

ARE  THE  GOODS  PURE  WOOL 

5.  Bottle  of  caustic  potash  solution.  This  may  be 
made  up  in  a  quart  bottle  by  putting  two  ounces  of 


Efficiency  in  the  Receiving  Department         123 

caustic  potash  and  then  filling  with  hot  water.  The  caus- 
tic will  dissolve,  and  the  solution  will  then  be  ready  for 
use. 

This  solution  is  used  in  determining  whether  there  is 
any  cotton  or  other  vegetable  fiber  in  wool  fabrics.  The 
method  is  very  simple.  A  sample  of  the  suspected  cloth 
is  placed  in  a  glass  or  test  tube  and  then  enough  of  the 
solution  is  poured  over  it  to  cover  it.  It  is  then  boiled 
for  fifteen  minutes. 

In  that  time  all  the  wool  should  have  disappeared  or 
dissolved.  Cotton  or  any  other  vegetable  fiber  will  remain 
undamaged.  Any  residue  remaining  shows  that  the  fabric 
is  not  pure  wool. 

6.  An  8-ounce  bottle  of  concentrated  sulphuric  acid 
(80  per  cent).  This  is  a  powerful  poison  and  should  be 
handled  carefully.  It  may  be  used  instead  of  caustic 
potash  in  determining  the  presence  of  wool  or  silk  in 
cotton  mixtures.  In  such  cases  the  sample  of  the  fabric 
is  placed  in  a  glass  or  test  tube  and  covered  by  the  acid. 
But  instead  of  heating  the  glass  it  is  in  this  case  placed 
in  a  cool  place  for  about  twelve  hours.  At  the  end  of 
this  time  all  the  cotton  should  have  disappeared  and  all 
the  wool  or  silk  sliould  still  remain. 

COTTON  AND  LINEN 

Another  use  for  this  acid  is  in  determining  the  pres- 
ence of  cotton  fibers  in  linen.  Both  will  be  dissolved  by 
the  acid,  but  the  linen  resists  tlie  acid  considerably  longer. 
The  test  is  applied  ])y  taking  a  sample  of  the  cloth  to  be 
tested,  washing  it  well  in  boiling  water  and  soap  suds, 
then  immersing  it  for  a  couple  of  minutes  in  the  con- 
centrated acid,  and  then  removing  to  see  if  some  of  the 
fibers  tend  to  be  destroyed  sooner  than  others. 

This   immersing  and  examination  may  be   repeated 


lL'4  Retail  Store  Management 

several  times.  If  one  set  of  fibers  begins  to  disappear 
before  the  rest,  it  is  a  fairly  certain  sign  that  the  linen 
is  not  pure.  The  sample  should  be  rinsed  in  water  after 
each  dip  in  the  acid.  When  wet  with  the  acid,  the  sam- 
ples should  be  handled  with  a  glass  rod  or  tube.  Any- 
thing but  glass  is  likely  to  be  attacked  by  the  acid. 

TESTING  SILK 

7.  A  4-ounce  bottle  of  50  per  cent  solution  of  chromic 
acid.  Any  druggist  can  prepare  this  properly.  This 
solution  is  used  in  testing  silk  to  determine  whether  any 
so-called  ''wild  silk"  has  been  introduced  into  it.  A  little 
of  the  solution  is  placed  in  a  glass  or  test  tube  and 
brought  to  a  boil.  Then  the  sample  of  the  fabric  is 
immersed  in  it.  True  silk  will  all  be  dissolved  in  it  within 
a  minute.  Wild  silk  will  remain  insoluble  for  at  least 
three  minutes.  The  wild  silks  include  tussah,  yamamai, 
Senegal,  and  several  other  varieties. 

8.  An  8-ounce  bottle  of  artificial  silk  testing  solution. 
The  solution  is  made  up  by  taking,  10  parts  copper  sul- 
phate, 100  parts  water,  and  5  parts  glycerine.  These  are 
mixed  thoroughly  in  the  bottle.  There  will  be  a  foggy 
substance  in  the  liquid.  Add  some  of  the  caustic  solu- 
tion. No.  5,  to  this  solution  until  this  fog  disappears. 
Only  a  little  caustic  solution  will  be  necessary. 

This  solution  is  useful  in  determining  whether  silk 
has  any  artificial  silk  in  it.  Some  of  the  solution  is  placed 
in  a  glass.  The  temperature  should  be  about  75  or  80 
degrees  or  about  ordinary  room  temperature.  Then  the 
sample  of  the  fabric  should  be  placed  in  it.  True  silk 
will  dissolve  almost  at  once  as  if  it  were  melted.  Artifi- 
cial silks  will  not  dissolve  at  all  in  this  solution.  The  test 
is  simple  and  effective. 


Efficiency  in  the  Receiving  Department         125 

TESTING  COLORS 

To  test  for  fastness  to  sunlight  expose  a  sample  in 
sunlight  for  a  period  of  several  days.  If  it  does  not 
begin  to  fade  within  thirty  days  it  is  ''very  fast"  in  color. 
If  it  fades  ^vithin  fifteen  to  twenty  days,  it  is  ''moder- 
ately fast."  If  it  fades  in  less  than  two  weeks,  it  is 
classed  as  "fleeting." 

To  test  for  fastness  to  "street  wear"  sprinkle  a  sam- 
ple of  the  fabric  with  water  in  which  a  little  lime  has 
been  added.  Allow  the  drops  of  water  to  evaporate, 
brush  the  sample  and  take  note  of  whether  any  change 
in  color  or  luster  appears. 

Fastness  to  perspiration  is  frequentlj'  tested  by  plac- 
ing a  sample  of  the  fabric  next  to  the  skin  and  keeping 
it  there  for  a  few  days.  Military  cloths  are  tested  for 
fastness  to  perspiration  by  placing  samples  in  the  shoes 
of  marching  soldiers. 

Fastness  to  washing  may  be  tested  by  washing  the 
samples  in  hot  soap  suds.  Frequently  boiling  the  sam- 
ples in  soap  suds  in  a  glass  or  test  tube  is  sufficient  to 
determine  whether  the  colors  are  fast  or  not. 

The  usual  method  is  to  put  an  und.ved  sample  of  the 
same  fabric  as  the  one  to  be  tested  in  the  test  tube.  The 
two  are  boiled  together.  If  there  is  any  tendency  to  fade 
in  the  washing,  the  color  in  the  dyed  fabric  "runs"  into 
the  undyed  piece.  If  the  latter  shows  any  change  after 
Ijoiling  it  is  a  sign  that  the  dyed  fabric  is  not  absolutely 
fast  to  washing. 

WEIGHTED  SILKS 

Silks  that  are  weighted  or  loaded  can  l)e  distinguished 
simply  by  burning  strands  of  thread  drawn  from  tlie 
fabric  selecting  some  from  l)oth  warp  and  woof.     Pure 


126  Retail  Store  Management 

silk  will  burn  in  a  flame  and  leave  but  very  little  ash  or 
residue.  In  the  flame  pure  silk  seems  to  melt,  and  the 
end  of  a  silk  thread  that  has  been  burned  is  always  shaped 
like  a  wax  bulb. 

Silks  that  are  weighted  with  iron  or  tin  salts,  when 
burned,  leave  much  ashes.  When  heavily  weighted  the 
threads  will  keep  their  original  appearance  and  shape 
after  burning,  but  wdll  crumble  like  dust  in  one 's  fingers. 

Many  other  tests  can  be  made  easily  in  the  store,  and 
the  actual  facts  determined  so  that  customers  can  be  told 
the  exact  truth  about  the  goods  they  buy.  It  is  for  such 
service  as  this  that  the  customer  rightfully  pays  the 
retailer  a  profit,  and  it  is  such  service  as  this  that  the 
best  customers  appreciate. 

After  the  checking  the  goods  are  ready  for  the  stock- 
room or  for  the  store.  If  the  goods  go  to  a  stockroom 
before  going  into  the  store,  considerable  attention  needs 
to  be  given  to  the  stockroom  in  the  way  of  keeping  the 
place  clean,  dry,  free  from  vermin,  with  proper  light  and 
temperature,  and  with  a  systematic  arrangement  that  will 
permit  finding  the  goods  easily  when  w^anted. 

TEST  QUESTIONS 

1.  "WTiat  rules  should  prevail  in  the  receiving  department  on 
how  to  open  cases  ? 

2.  How  should  merchandise  be  checked  1 

3.  How  should  errors,  breakages,  etc.,  be  handled? 

4.  "What  practical  tests  can  often  be  made  for  inspecting 
merchandise? 

5.  "What  equipment  is  required  for  such  simple  tests  in  textiles, 
for  example? 

6.  "What  are  some  of  the  tests  explained  in  the  chapter? 


CHAPTER  XI 
pricing  the  goods 

The  General  Rule 'To  Be  Followed 

Marking  the  prices  at  which  the  goods  are  to  be  offered 
to  the  pubHc  merits  serious  study.  Many  factors,  such 
as  custom,  competition,  and  costs  of  the  goods  and  of 
selUng  govern  the  matter.  The  principle  of  pricing  is 
clear,  but  the  practice  of  the  principle  is  often  complex. 
The  principle  is  that  goods  should  be  marked  at  what 
they  will  bring. 

This  principle  of  price-making  may  be  applied  by 
applying  one's  knowledge  of  the  trade,  knowing  what  the 
customers  may  probably  want  to  pay,  what  they  have 
paid  in  the  past,  and  what  other  stores  are  selling  the 
same  or  similar  goods  for. 

In  afTLxing  prices  the  buyer  may  profitably  avail  him- 
self of  the  services  of  the  more  experienced  salespeople. 
The  salespeople  may  ])e  asked  their  opinion  as  to  the 
values,  what  they  think  people  will  pay  for  them,  or 
better  still,  what  they  will  be  able  to  sell  the  goods  for. 
The  salesperson's  constant  contact  with  the  customers 
should  be  of  great  service  in  determining  what  customers 
want  and  what  they  seem  willing  to  pay.  Tji  other  words, 
the  salespeople  are  probably  better  fitted  than  anyone 
else  to  state  what  are  the  customary  price  levels  for  the 
classes  of  customers  that  come  to  their  counters,  espe- 

127 


128  Befall  Store  Management 

cially  if  tlie  salespeople  have  been  observant  in  their 
daily  work. 

Factors  Affecting  Pkicing 

CUSTOM 

Custom  plays  an  enormous  part  in  the  daily  life  of 
every  person.  Custom  is  merely  the  habit  of  many  indi- 
viduals applied  to  matters  of  concern  to  many  people. 
There  are  customary  prices  25  cents,  50  cents,  and  $1.00 
for  hosiery;  $2.00,  $2.50,  $3.00,  $3.50  and  $5.00  for  shoes ; 
10  cents  and  15  cents  for  a  package  of  breakfast  food; 
10  cents  and  15  cents  for  a  can  of  vegetables;  25  cents 
for  a  bottle  of  pickles;  50  cents,  $1.00,  $1.50,  and  $2.00 
for  a  pair  of  gloves;  etc.  In  some  quarters,  because  of 
persistent  bargain  advertising,  some  figures  such  as  49 
cents,  98  cents,  $1.29,  etc.,  have  lost  their  original  sig- 
nificance and  have  become  customary  prices,  and  as  such 
merely  entail  additional  costs  to  retail  stores  in  the  way 
of  time  lost  in  change  making. 

As  a  rule,  it  is  best  for  most  goods  and  in  most  locali- 
ties not  to  attempt  to  change  customary  prices.  Qualities 
may  be  adjusted  to  prices  more  readily  than  prices  to 
quality  in  most  cases.  But  many  stores  achieve  consid- 
erable advertising  value  by  selling  goods  at  other  than 
customary  prices.  Departing  from  customary  prices 
shocks  the  attention  of  the  customer,  and  agreeably  so, 
if  the  offered  price  is  less  than  the  customary  price. 
Such  prices  come  to  the  attention  in  much  the  same  way 
as  the  find  of  money  on  the  street  or  a  gift  from  an  unex- 
pected source.  It  is  the  unusual  or  the  opposite  from 
custom. 

Prices  higher  than  customary  likewise  shock  the  cus- 
tomer, but  disagreeably,  and  the  disagreeable  feeling  is 


Pricing  the  Goods  129 

accentuated,  not  only  by  the  fact  that  the  price  is  too 
high,  but  also  by  the  feeling-  that  it  departs  from  the 
usual  or  customary.  When  expostulating  that  the  price 
is  too  high,  the  customer  frequently  says,  ''Why!  I  never 
paid  more  than  so  much  for  it  before."  This  remark 
springs  straight  from  the  feeling  aroused  by  a  habit 
broken. 

As  already  suggested,  prices  that  are  not  customary 
fail  to  have  advertising  value  and  only  add  more  labor 
and  expense  to  a  store  when  continued  too  long  for  any 
article  or  too  generally.  The  unusual  tends  to  become 
customary  and  thus  offers  no  shock,  and  does  not  catch 
the  customer's  attention.  This  is  precisely  the  situation 
in  the  American  retail  markets  to-day.  ''Bargain  adver- 
tising" has  been  carried  to  the  point  where  it  has  lost 
much  of  its  effectiveness.  People  have  grown  accus- 
tomed to  it.  They  expect  it.  Its  truthfulness  is  dis- 
counted very  generally.  It  excites  no  feeling  of  shock 
such  as  described  above. 

MAINTAINED  PRICES 

In  the  long  run,  for  the  majority  of  dealers,  the  cus- 
tomary^ price  makes  for  stability.  Standardized  or  main- 
tained pricos  are  in  many  ways  preferable.  Competition 
is  drawn  from  price  to  quality  and  service.  But  with 
the  exception  of  a  few  lines  of  merchandise,  sold  in  spe- 
oial  channels,  the  tendency  seems  to  be  away  from  rather 
than  toward  the  price  maintenance  principle.  Permitting 
manufacturers,  who  choose  to  do  so,  to  require  that 
their  goods  be  sold  by  dealers  at  standard  prices  will 
revive  merchandising  at  customary  prices.  At  present 
the  U.  S.  courts  oppose  such  control  over  retail  markets, 
but  attempts  are  being  made  to  get  legislation  that  will 
favor  it.     In  the  meantime  the  more  well-known  goods 


130  Retail  Store  Management 

sold  at  standard  or  customary  prices  will  continue  to  be 
the  special  targets  for  price  cutters  who  tliereby  seek 
to  attract  trade  from  other  stores  to  themselves. 

COMPETITION 

Competition  helps  to  fix  the  upper  levels  at  which  goods 
may  be  sold.  The  same  or  similar  goods  can  hardly  be 
sold  for  more  than  competitors  are  getting.  For  this 
reason  it  is  highly  important  for  a  buyer,  and  his  mer- 
chandise manager,  if  in  a  large  store,  to  know  what  others 
are  selling  the  same  or  similar  goods  for.  This  knowl- 
edge can  be  used  not  only  in  marking  the  goods  pur- 
chased, but  also  in  some  cases  as  a  leverage  in  prying 
better  prices  out  of  the  supplier. 

A  dealer  can  hardly  be  expected  to  carry  goods  upon 
which  he  makes  no  profit;  thus  costs  of  the  goods  plus 
costs  of  selling  fix  the  lower  limits  at  which  prices  may 
be  set.  If  the  competition  price  of  a  certain  article  leaves 
the  buyer  no  profit  for  his  house,  he  has  but  three 
choices : 

1.  Buy  it  for  less  if  possible. 

2.  Reduce  his  costs  of  selling  it. 

3.  Refuse  to  handle  the  article  in  his  store. 

Assuming  that  the  article  cannot  be  bought  for  less, 
the  buyer  may  then  see  what  he  can  do  about  reducing 
his  expenses  of  selling.  The  fixed  expenses  such  as  for 
rent,  interest,  insurance,  and  so  on,  cannot  be  cut  without 
radical  changes  in  store  plans,  such  as  reducing  floor 
space  used  or  reducing  stock  to  a  minimum.  Reducing 
salaries  of  the  salespeople  either  by  cutting  salaries  or 
by  dismissing  high-salaried  people  and  hiring  cheaper 
help  is  a  very  questionable  and  usually  foolish  method 
of  saving,  since  it  generally  results  in  loss  in  the  long 


Pricing  the  Goods  131 

run.  Something  can  sometimes  be  done  by  reducing  the 
amount  of  credit  business,  and  by  giving  more  attention 
to  the  customers  in  the  store,  so  that  the  goods  do  not 
come  back  for  credit  or  exchange.  Delivery  expense, 
expense  for  alterations,  and  attention  to  prevent  little 
wastes  of  material  may  sometimes  be  effectively  em- 
ployed. Eliminating  bad  credits,  unsystematic  delivery, 
and  unwise  sales  on  approval  has  in  some  cases  resulted 
in  stores  passing  from  loss  to  profit  margins. 

The  cost  of  the  goods  plus  the  costs  of  selling  is  never 
directly  the  true  basis  of  pricing.  It  is  merely  the  lower 
level  below  which  prices  must  not  drop.  Some  goods 
may  be  sold  for  prices  very  near  this  level,  others  for 
much  above  it.  All  depends  upon  the  desirability  of  the 
goods  from  the  consumer's  viewpoint. 

AVERAGE  PERCENTAGE 

Many  stores  aim  at  fixing  prices  at  a  certain  average 
percentage  above  costs  that  will  cover  tlie  expenses  and 
give  a  certain  profit.  Except  in  instances  where  but 
few  things  are  handled,  and  those  of  the  same  quality 
and  desirability,  the  average  cannot  be  made  the  actual 
for  all  goods  in  the  store.  Some  prices  must  be  made 
above  and  some  below  the  average.  In  the  sale  of  sea- 
sonable articles,  saj'-  millinery,  even  the  same  lot  of  hats 
must  usually  be  sold  at  varying  prices.  Hats  at  the 
beginning  of  the  season  should  bring  much  above  the 
average  while  hats  at  the  end  of  the  season  will  bring 
considerably  less. 

TTTE  MATHEMATICS  OF  rnTCING 

Many  morcluints  have  been  deceived  by  the  use  of 
percentages  in  allowing  for  profits.  There  are  two  bases 
from  wliieh  io  figure,  the  cost  of  the  goods  and  the  sclliufj 
price  of  the  goods.     Suppose  the  cost  of  an  article  is 


132  Bet  ail  Store  Management 

$1.00  and  a  mercliant  wislies  to  add  a  margin  of  SSyo% 
to  the  selling  price.  How  would  he  figure  ill  Adding 
33%%  of  the  cost  will  not  make  it,  for  note  the  results : 

33i/i%  of  $1.00=z:33i/3C==margin  for  gross  profit 

$1.00+33i/3C==:$1.33V3=solling  price 

The  percentage  earned  on  selling  price  =  33%  h-  1.33% 

=25%. 

Instead,  therefore,  of  earning  33%%  on  the  selling 
price  as  he  had  planned,  the  merchant  would  actually 
earn  only  25%,  because  different  bases  are  used  in  the 
calculation,  and  the  results  can  never  be  the  same. 

Another  method  of  calculation,  must,  therefore,  be 
used.  To  find  the  correct  selling  price  of  the  above 
article  the  following  calculations  are  made: 

Let  100%=sclling  price 

33%%  =  margin  on  selling  price 


66%%  =  invoice  cost  =  $1.00 

100  X  $1.00 

Selling  price= =$1.50 

66% 

It  is  evident,  therefore,  that  33%%  of  the  selling 
price  equals  50%  of  the  cost  price,  or  marking  up  an 
article  50%  of  its  costs  is  exactly  the  same  as  adding 
33%%  of  its  selling  price.  The  following  table  shows  a 
few  of  these  equivalents : 


Soiling  Price 

Kxprpssod  iis 

forrpspondlng 

Cost 

Expressed  as 

rercentages 

Fractions 

I'rlce  I'crcontages 

F'ractlons 

50 

1/2 

100 

1/1 

33  1/3 

1/3 

50 

1/2 

25 

1/4 

33  1/3 

1/3 

20 

1/5 

25 

1/4 

121/2 

1/8 

14  2/7 

1/7 

10 

1/10 

111/9 

1/9 

Pricing  the  Goods  133 

A  very  simple  formula  for  figuring  the  percentage  to 
be  added  to  cost  in  order  to  realize  a  given  percentage 
on  the  selling  price  is  the  following : 

Let  X  =  the  percentage  of  gross  profit  desired  on  sell- 
ing price. 

X 

Then =  percentage  to  be  added  to  cost  price. 

100— X 

Substituting  in  the  formula  the  figures  when  a  gross 
profit  of  33Yi%  is  desired  on  the  selling  price,  we  get  the 
following  calculations : 

331/3 
=  507c  to  be  added  to  cost  price. 


100—331/3 

"We  are  now  ready  to  arrive  at  a  general  formula  for 
figuring  the  selling  price  directly.  The  formula  is  as 
follows : 

100  X  cost 

• =  selling  price. 

100 — (selling  expense  +  desired  profit) 

If,  for  example,  in  the  above  case  the  selling  expense 
is  23%%  and  the  net  profit  desired  is  10%,  the  selling 
price  would  be  figured  thus: 

100X$1.00 
=  $1.50=seHing  price. 


100— (231/j+lO) 

These  formulas  will  enable  anyone  to  calculate  directly 
the  selling  price  of  an  article  or  the  percentage  wliich 
must  be  added  to  cost  in  order  to  make  any  desired  per- 
centage of  gross  profits  on  sales.  Tlie  table  given  in 
Figure  21  will  prove  a  valuable  guide  in  figuring  some 


134 


Betail  Store  Management 


of  the  more  common  selling  prices  when  tlie  invoice  price 
is  given. 


Selling 

Trice — 

rnoFiT  I 

"laUKED    ( 

•)N  Selli 

NO  Price 

Invoice 

Price 

5% 

10% 

15% 

20% 

25% 

30% 

33%% 

50% 

3 

3^ 

3y3 

3y2 

3% 

4 

4y4 

4% 

6 

4 

4y4 

4y2 

4% 

5 

5y3 

5% 

6 

8 

5 

5% 

5y2 

5% 

6y4 

6% 

7y4 

7% 

10 

6 

6% 

6% 

7 

7y2 

8 

8% 

9 

12 

7 

71/2 

7% 

8y4 

8% 

9y3 

10 

10% 

14 

8 

8 1/2 

8% 

gyo 

10 

10% 

11% 

12 

16 

9 

9y2 

10 

10  y- 

11  y* 

12 

12% 

13% 

18 

10 

loyo 

11  ^^ 

11% 

12  y. 

13  y, 

14% 

15 

20 

11 

11% 

12  y4 

13 

13% 

14% 

15% 

16% 

22 

12 

12% 

13  ya 

1414 

15 

16 

i7y4 

18 

24 

13 

13% 

14  yo 

15% 

i6y4 

17% 

18% 

19% 

26 

14 

14% 

15  yo 

leyo 

i7y2 

18% 

20 

21 

28 

15 

16 

16% 

18 

18% 

20 

21% 

22% 

30 

16 

17 

18 

19 

20 

2iy3 

23 

24 

32 

17 

18 

19 

20 

21  y* 

22% 

24y4 

25% 

34 

18 

19 

20 

21  y4 

22  y2 

24 

25% 

27 

36 

19 

20 

21  y4 

22  y. 

23% 

25  ya 

27 

28% 

38 

20 

21 

22  y4 

23  ya 

25 

26% 

28% 

30 

40 

25 

27 

28 

30 

31  yi 

33  ya 

35% 

37% 

50 

30 

32 

33  ya 

35% 

37y2 

40 

42% 

45 

60 

35 

37 

39 

41  y4 

43% 

46% 

50 

52% 

70 

40 

42  y4 

44y2 

47 

50 

53% 

57 

60 

80 

45 

47yo 

50 

53 

56y4 

60 

64% 

67% 

90 

50 

53 

56 

59 

62  y2 

67 

71% 

75 

100 

55 

58 

61 

65 

69 

73 

79 

83 

110 

60 

63 

67 

71 

75 

80 

86 

90 

120 

65 

68 

72 

76 

81 

87 

93 

98 

130 

70 

74 

78 

82 

88 

93 

100 

106 

140 

75 

79 

83 

88 

93 

100 

107 

113 

150 

80 

84 

89 

94 

100 

107 

114 

120 

160 

85 

89 

94 

100 

106 

113 

121 

128 

170 

90 

95 

100 

106 

113 

120 

129 

135 

180 

95 

100 

106 

112 

119 

127 

136 

143 

190 

100 

105 

111 

118 

125 

133 

143 

150 

200 

Fig.  21. — Showing  Invoice  Price  and  Selling  Price  at  Certain 

Rates  of  Profit  Figured  on  Selling  Price 

Fractions  are  given  In  nearest  value  of  14,  %.  and  %  and  are  omitted  entirely 

In  the  larger  values. 


Pricing  the  Goods  135 

THE  TURNOVEK  TO  BE  CONSIDEEED 

Another  factor  in  price  making  is  the  turnover. 

"Turnover"  means  the  rate  at  which  the  capital  in- 
vested in  stock  comes  back  and  may  be  reinvested  within 
a  given  period  of  time,  commonly  a  year.  A  dollar  in- 
vested in  an  article  that  is  sold,  permitting  reinvestment 
represents  one  turnover. 

The  usual  method  of  computing  the  turnover  is  to 
divide  the  sales  for  the  period  under  consideration  by 
the  stock  at  inventory  as  it  was  at  the  beginning  of  the 
period  or  at  the  end  of  the  period. 

There  are  several  errors  in  this  method.  In  the  first 
place  the  inventory  usually  represents  stock  values  at 
cost ;  consequently  the  comparison  is  made  between  values 
at  cost  prices  on  the  one  hand  with  values  at  selling  prices 
on  the  other.  The  comparison  should  be  made  between 
gross  sales  and  inventory  at  selling  values,  or  between 
sales  reduced  to  cost  by  subtracting  the  gross  profits 
and  inventory  at  costs. 

Another  serious  error  in  this  method  is  that  the  annual 
inventory  may  not  be  at  all  a  fair  representation  of  the 
average  capital  invested  in  stock. 

A  correct  rate  of  turnover  can  be  found  by  dividing 
the  sales  by  average  stock  carried  during  the  year  at 
its  retail  values.  Or,  the  result  can  be  obtained  by  divid- 
ing sales  reduced  to  cost  values  by  average  stock  at  cost. 
The  result  will  be  th<;  same  if  the  calculations  have  been 
consistent  throughout.  For  example,  if  the  average  in- 
ventory is  $l!r>,000  at  cost  or  $50,000  at  the  selling  price 
and  the  actual  sales  are  $75,000  at  cost  or  $150,000  at 
retail,  the  rate  of  turnover  is,  of  course,  three  in  each 
ease.  Obviously,  however,  the  result  would  be  very  mis- 
leading if  the  inventory  were  used  at  cost,  while  the  sales 
were  used  at  retail. 


13() 


Betail  Store  Management 


The  followiiii?  table  indicates  customary  turnovers  in 
successful  stores : 

Grocery       8  to  12  times  per  year. 


Hardware 

2.5 

Dry  Goods 

3 

Shoes 

2.5 

Furniture 

2 

Drugs 

1.5 

Jewelry 

1.5 

It  is  proverbial  that  lowering  the  price  of  most  articles 
usually  though  not  always  stimulates  demand  for  it.  A 
toilet  article  increased  its  sales  over  ten  times  when  the 
price  was  reduced  from  35  cents  to  25  cents,  the  lower 
being  a  customary  price.  At  19  cents  the  same  article 
increased  its  sales  to  double  what  it  was  at  25  cents.  At 
which  price  should  it  be  sold?  All  depends  upon  the 
possible  profit. 

Suppose  the  cost  to  be  15  cents  apiece,  straight.  At 
35  cents,  each  article  would  bring  in  a  profit  of  20  cents. 
At  25  cents,  a  profit  of  10  cents  would  be  made  on  each, 
but  since  the  sales  increased  tenfold,  the  total  profit  would 
be  $1.00  on  the  capital  invested  in  one  article  within  the 
time  of  the  sale.  At  19  cents  the  profit  on  each  would  be 
4  cents,  but  on  twenty,  the  resulting  sales,  the  total  would 
be  80  cents.  Under  the  conditions  of  the  illustration,  it 
is  obvious  that  the  proper  price  for  this  article  is  25  cents 
and  not  19  cents  or  35  cents. 

In  conclusion,  the  retail  price  must  be  fixed  by  consid- 
ering what  it  will  bring  under  whatever  competition  may 
exist.  Customary  prices  are  probably  best  for  the 
majority  of  goods  under  most  circumstances.  The  cost 
of  the  goods  and  of  selling  should  be  fully  known  not 
for  the  purpose  of  fixing  the  price,  but  to  serve  as  a  guide 


Pricing  the  Goods  137 

pointing  out  the  lower  limits.  Finally  tlie  correct  price 
is  that  amount  which  will  bring  in  the  greatest  net  profits, 
total  sales  and  total  expenses  considered. 

TEST  QUESTIONS 

1.  What  are  some  of  the  chief  factors  affecting  the  pricing 
of  goods  ?    How  is  a  buyer  to  determine  prices  1 

2.  Why  should  customary  prices  be  recognized? 

3.  When  is  a  variation  from  customary  prices  justifiable? 

4.  What  are  the  advantages  of  maintained  prices  ? 

5.  How  does  competition  influence  selling  prices  ? 

6.  Indicate  the  danger  in  marking  up  an  average  percentage 
on  all  goods. 

7.  What  are  the  two  bases  used  for  figuring  profits?    Which 
should  be  used  ? 

8.  A  profit  of  SSy3%  on  the  selling  price  is  what  per  cent  on 
the  cost? 

9.  Show  a  general  formula  for  figuring  the  selling  price  at 
any  desired  profit. 

10.  How  is  turnover  figured  ? 


CHAPTEE  XII 

RETAIL    STORE    POLICIES 

A  store  is  known  by  its  policies.  '*  Satisfaction  guar- 
anteed, "  "  Your  money  back  if  you  want  it, "  *  *  The  cus- 
tomer is  always  right,"  ''Alterations  made  without 
charge,"  "One  price  to  all,"  ''Your  credit  is  good  here," 
are  policy  slogans  that  are  familiar  to  all  and  that  have 
made  certain  stores  famous. 

The  way  in  which  goods  are  sold  is  just  as  important 
to  the  public  as  the  goods  themselves.  Policies  concern 
themselves  with  the  ways  of  selling  goods,  in  other  words, 
with  the  store's  service.  The  policy  is  the  principle  fol- 
lowed by  the  store  in  given  classes  of  conditions. 

Value  of  Store  Policies 

A  policy  constantly  followed,  if  in  line  with  what  the 
people  want,  has  a  cumulative  advertising  effect.  It 
offers  a  talking  point  for  both  store  employees  and  the 
public.  It  offers  an  effective  point  of  departure  for  the 
advertising  of  the  store. 

Take  the  policy  of  free  exchanges  as  an  example.  Car- 
ried to  its  logical  limit,  disregarding  for  the  moment  its 
element  of  abuse,  customers  say  to  each  other  at  their 
homes,  ""Well,  you  can  alwavs  take  back  the  article  if 

7  7*  V 

you  find  you  don't  like  it."    At  the  store  salespeople 
in  many  cases  close  the  sale  by  saying,  "And  if  you 

138 


Retail  Store  Policies  ■    139 

don't  like  it,  bring  it  back."  The  advertising  man  like- 
■svise  refers  to  the  policy  in  effective  phraseology. 

The  store's  policies  should  cover  the  limits  of  its  meth- 
ods within  which  the  individual  employees  should  have 
the  opportunity  to  exercise  initiative.  Since  the  limits 
are  set,  the  salesman  who  finds  himself  pushed  by  the 
customer  can,  if  thought  best,  shift  his  responsibility  by 
quoting  the  policy. 

To  illustrate,  it  may  be  the  store's  policy  to  make  a 
moderate  charge  for  alterations.  A  customer  may  urge 
the  salesperson  to  make  an  exception  in  his  or  her  case. 
The  salesperson  may  urge  the  fact  that  the  alteration 
asked  is  one  that  will  cost  the  customer  but  very  little,  or 
he  may  show  the  customer  how  to  do  the  work  herself,  if 
that  seems  advisable ;  but  he  will  refuse  to  alter  the  gar- 
ment with  the  reply  that,  '*I  am  sorry  but  the  policy  of 
the  store  is  not  to  make  alterations  free."  Then  he  will 
follow  \\dth  an  explanation  to  convince  the  customer  that 
the  policy  is  right. 

The  policies  of  a  store  thus  serve  both  to  advertise  the 
store  and  to  define  its  limitations.  The  policy  is  at  one 
and  the  same  time  something  to  live  up  to  as  well  as  a 
rule  forbidding  going  beyond.  Well-defined  policies  fully 
explained  go  far  toward  making  it  easy  to  get  employees 
to  do  their  work  along  proper  lines. 

Kinds  of  Policies 

A  store's  policies  include  such  matters  as  qualities  of 
goods  handled,  buying  methods,  methods  of  paying  for 
goods,  methods  of  getting  employees,  methods  of  training 
and  remunerating  employees,  etc.  Here  we  shall  con- 
sider briefly  only  those  that  have  to  do  with  selling  the 
goods  to  the  public. 


140  Retail  Store  Management 

Pricing  Policies 

Pricing  policies  come  first  for  consideration.  Not  long 
ago  all  stores  priced  their  goods  in  cipher  and  sold  them 
for  as  much  above  the  cipher  as  they  could  get.  To  use 
a  well-worn  expression  from  the  transportation  field,  they 
charged  "what  the  traffic  would  bear."  This  policy  is 
economically  sound,  though  it  now  is  giving  way  to  the 
policy,  "One  price  to  all." 

When  the  large  stores  began  to  come  into  existence, 
some  sixty  years  ago,  store  managers  often  found  that 
their  employees  were  no  match  in  the  bargaining  process 
with  some  of  their  customers.  The  employees  were  young 
and  inexperienced,  while  the  customers  were  shrewd  and 
capable.  This  naturally  drove  the  managers  to  fixing  the 
prices  in  advance,  the  prices  at  which  they  thought  the 
goods  would  sell. 

Considerable  misgiving  was  felt  for  the  policy,  but  the 
public  liked  it,  and  now  there  is  no  question  but  that  a 
one  price,  fixed  for  all,  is  much  more  desirable  than  the 
variable  price  fixed  as  a  result  of  bargaining  at  every 
sale.  Thus  the  necessity  of  employers  for  cheaper,  inex- 
perienced salespeople  forced  them  to  invent  the  new  sales 
policy  that  turned  out  to  be  a  vast  improvement  over  the 
old  methods. 

The  essential  features  of  the  one  price  system  are  that 
it  removes  from  the  salespeople  the  power  to  change  the 
price.  The  price  may  be  changed  as  often  as  liked  by  the 
store  manager  but  only  as  affecting  sales  in  the  future 
and  never  as  affecting  individual  sales  at  any  given 
moment. 

Knowing  the  policy,  both  customer  and  salesperson  are 
saved  the  time  and  disagreeableness  of  haggling  about 
the  price. 


Retail  Store  Policies  141 

Pricing  at  Diffeeent  Levels 

There  has  been  much  discussion  recently  of  a  policy  of 
pricing  goods  at  different  levels  to  cover  different 
amounts  of  service.  For  example,  a  California  store  is 
reported  to  have  a  certain  price  for  goods  sold  for  cash 
and  taken  home  by  the  customer  himself  or  herself.  An 
extra  5  per  cent  added  to  the  price  of  the  goods  when 
delivery  is  expected,  and  another  5  per  cent  is  added 
where  sales  are  made  on  credit.  These  percentages  are 
arbitrary,  and  many  instances  could  be  pointed  out  to 
show  them  illogical,  but  the  newspaper  account  of  the 
California  store  states  that  the  store  is  making  a  success 
of  its  plan.  , 

There  are  sound  business  grounds  for  different  price 
levels  in  the  retail  trade,  and  it  is  likely  that  several  new 
policies  will  be  developed  along  these  lines.  There  are, 
however,  many  objections  to  the  adoption  of  such  a  plan, 
such  as  the  difficulty  of  working  out  price  differences  that 
will  not  invite  successful  competition  and  the  difficulty  of 
changing  popular  buying  habits.  For  a  few  years  to  come 
it  seems  likely  that  the  different  price  level  plans  will  be 
applied  only  in  the  large  cities  and  only  by  a  few  of  the 
more  enterprising  and  adventurous  dealers.  The  large 
city,  ratlier  than  the  small  community,  is  likely  to  offer 
the  right  field  for  beginning  such  a  policy  because  of  the 
variety  of  tastes  and  demands  likely  to  be  found  there, 
and,  therefore,  the  likelihood  of  finding  a  number  who  will 
be  interested  in  this  policy  sufficient  to  support  the  store. 
It  is  not  impossible  that  such  conditions  may  be  found  in 
some  small  places,  but  it  is  somewli.it  improbable  for  the 
average  community. 


142  Retail  Store  Management 

Policies  as  to  Store  Services 

Service  is  essential  to  present  day  retailing.  How  far 
a  store  shall  go  in  the  way  of  offering  to  deliver  goods, 
make  exchanges,  send  out  goods  on  approval,  or  on 
memorandum,  will  depend  upon  the  community  and  what 
other  stores  are  doing. 

Theoretically  the  ser\ice  will  go  as  far  as  the  people 
will  pay  for  it.  There  is  a  point  beyond  which  customers 
mil  prefer  to  incur  some  extra  trouble  in  order  to  secure 
lower  prices.  On  the  whole,  however,  the  point  for  most 
people,  is  not  reached  until  after  reasonable  delivery  and 
other  services  are  provided. 

Approval  Sales 

Sales  on  approval  have  come  to  be  one  of  the  most 
serious  expense  factors  in  retailing  in  a  great  many  com- 
munities. Some  stores  have  to  take  back  under  this  pol- 
icy as  much  as  one-half  of  their  gross  sales.  This  means 
double  selling  expense,  waste,  and  extra  labor  in  all 
departments. 

Competition  is  the  mother  of  sales-on-approval.  A 
certain  degree  of  such  selling  is  justifiable,  but  the 
extremes  are  uneconomical  and  without  justification  upon 
any  ground.  The  only  remedy  seems  to  be  less  competi- 
tion and  more  cooperation  either  by  understanding  or  by 
agreement  among  the  store  managers  of  a  community. 
Something  may  be  done  by  progressive  concerns  in  limit- 
ing returns  and  exchanges  by  calling  attention  to  the 
unsanitariness  and  likelihood  of  contagion  in  the  practice 
of  such  exchanges  in  such  articles  as  are  used  for  dress 
or  toilet.  This  argument  will  give  a  good  reason  for 
limiting  the  policy  and  at  the  same  time  discourage  peo- 
ple from  going  to  stores  where  these  limitations  are  not 
exercised. 


Retail  Store  Policies  143 

Cash  or  Credit  Policies 

Cash  or  credit  lias  been  discussed  pro  and  con  for  a 
long  time.  It  must  be  said  that  more  reasons  have  usu- 
ally been  given  for  the  cash-only  policy  than  for  credit 
selling;  but  in  practice  the  great  volume  of  business  is 
done  on  a  credit  basis. 

Credit  is  the  logical  form  of  distribution  for  the  major- 
ity of  stores  in  most  conununities.  The  great  volume  of 
business  at  wholesale  is  conducted  on  a  credit  basis.  Most 
consumers,  like  dealers  and  producers,  must  buy  before 
their  income  gets  to  them.  There  is  no  good  reason  why 
an  individual  who  is  regularly  employed,  or  possesses 
other  good  prospects  of  an  income  should  not  be  granted 
limited  credit.  Regardless  of  theorizing  on  the  value  of 
retailing  at  cash,  most  stores  will  find  it  advisable  to  give 
credit  to  many  of  their  customers  at  least  for  short  peri- 
ods of  time,  corresponding  to  the  length  of  time  between 
pay  days  or  income  receiving  time.  At  the  same  time, 
under  other  conditions  there  will  always  be  a  place  for 
cash  business  concerns  who  will  be  able  to  get  business 
enough  to  succeed  on  their  policies.  Selling  at  cash  gen- 
erally requires  concessions  or  services  in  some  other  line 
to  make  up  for  the  no-credit  policy. 

It  goes  without  saying  that  the  store  of  the  ])rpsent 
must  accord  ec^ual  treatment  to  all  customers  who  enter. 
Still  in  the  larger  communities  it  may  be  found  impos- 
sible to  draw  all  classes  of  trade  successfully;  hence 
every  possible  effort  must  be  centered  to  get  and  to  keep 
the  trade  of  the  class  most  desired.  This  result  can  be 
gainetl  by  proper  display  methods  and  by  the  character 
of  the  goods  and  advertising  much  better  than  by  snol)- 
bishness  in  the  store  or  othor  foolish  policies. 


144  Retail  Store  Management 

Handling  of  Complaints 

In  tbe  treatmoiit  of  complaints,  it  has  been  found  inva- 
riably best  to  assume  at  the  start,  at  least,  that  the  cus- 
tomer is  right.  Later  investigation  may  reveal  the 
customer  is  wrong,  but  the  assumption  should  be  that  the 
customer  must  be  right  at  the  start.  To  conclude  that  the 
customer  may  be  wrong  without  the  most  careful  investi- 
gation, invariably  leads  to  trouble.  Any  experienced 
store  manager  has  had  experiences  like  the  following: 

In  a  town  of  10,000  population  one  of  the  general  stores 
held  a  sale  one  day  on  ladies'  handbags,  regularly  sold  at 
$4.50,  but  on  this  day  sold  at  $2.50.  A  professional  man, 
well  known  in  the  town,  happened  in  that  day  and  bought 
a  handbag  as  a  present  for  his  wife.  When  he  got  home, 
his  wife  concluded  that  something  else  would  suit  her 
better,  so  the  next  day  she  took  the  handbag  to  the  store, 
accompanied  by  two  or  three  friends.  The  store  had  the 
policy  of  freely  exchanging  such  goods,  so  the  handbag 
was  accepted  by  one  of  the  salespeople  in  the  store  and 
a  trade  memorandum  showing  that  the  store  owed  $2.50 
was  made  out  and  sent  to  her.  On  receiving  it  she  looked 
at  it  and  returned  it  with  the  remark  that  it  should  be 
$4.50. 

''But  the  handbags  were  sold  for  $2.50  yesterday," 
said  the  salesperson. 

''My  husband  told  me  that  he  paid  $4.50,"  she  repHed 
rather  warmly,  and  in  the  presence  of  her  friends.  The 
salesperson  tried  to  explain  that  the  handbag  must  have 
been  sold  to  her  husband  for  $2.50.  This  only  angered 
the  customer.  Before  her  friends  the  inference  had  been 
passed  that  her  husband  had  lied  to  her.  She  refused  to 
receive  the  due  bill,  left  her  companions,  walked  out  of 
the  store  and  up  to  her  husband's  office.  Upon  entering 
his  office  she  said  stemlv : 


Retail  Store  Policies  145 

''What  did  you  pay  for  that  handbag?" 

''I  paid  $4.50  for  it,"  he  repUed. 

'  *  What  did  you  do  with  the  sales  slip  I ' '  she  next  asked. 

He  tried  to  think,  but  said  he  didn't  know,  but  finally 
thought  that  he  might  have  thrown  it  out  of  his  pocket 
into  the  office  waste  paper  basket  that  morning. 

She  rushed  over  to  the  waste  paper  basket,  turned  out 
the  contents,  and  finally  found  the  sales  slip.  On  it  was 
marked  $4.50.  Though  the  handbags  had  been  on  sale  the 
day  before,  some  salesperson  had  made  the  mistake  of 
selling  one  to  this  man  at  the  regular  instead  of  the  spe- 
cial sales  price. 

It  was  reasonably  assumed  that  the  wife  was  mistaken 
at  the  store,  but  the  assumption  happened  to  be  entirely 
wrong. 

This  store  never  regained  the  trade  of  this  family. 

A  policy  of  considering  the  customer  as  always  right 
at  the  start  would  have  obviated  the  whole  trouble.  Lack 
of  the  policy  lost  the  store  thousands  of  dollars'  worth  of 
trade  in  the  years  that  followed. 

It  is  human  nature  to  err  unintentionally  and  to  defend 
the  mistake  with  perfect  honesty  of  purpose.  The  store- 
keeper who  recognizes  this  fact  knows  that  there  are  two 
possible  causes  for  an  error — the  store  and  the  customer. 
It  is  good  diplomacy  and  good  business  to  assume  that 
the  customer  is  right  until  clearly  proved  in  error  by 
incontestable  evidence.  A  tactful  handling  of  the  case 
on  the  basis  of  such  facts  will  usually  result  in  a  fair 
adjustment  as  well  as  the  retention  of  the  customer's 
goodwill  and  trade. 

In  conclusion,  the  store  needs  policies  to  protect  itself 
from  its  own  errors.  It  needs  policies  as  a  matter  of 
defense  against  abuses.  It  needs  policies  ns  a  matter  of 
<rrade  promotion,  and  it  needs  policies  that  may  serve  as 
standards  of  performance  for  all  wlio  are  employed. 


146  Retail  Store  Management 

TEST  QUESTIONS 

1.  What  is  the  value  of  definite  store  policies  in  so  far  as 
eustoraei*s  are  concerned  ? 

2.  llow  does  a  definite  .store  policy  aid  in  better  supervision  of 
employees  ? 

3.  Enumerate  the  most  important  points  in  regard  to  which 
definite  store  policies  should  prevail. 

4.  Under  what  conditions  is  pricing  at  different  levels  prac- 
ticable ? 

5.  What  attitude  should  a  store  adopt  as  to  approval  sales? 

6.  Under  what  conditions  are  credit  sales  worth  while? 

7.  What  should  be  the  policy  as  to  handling  complaints  ? 


CHAPTER  XIII 
art  of  finding  good  employees 

The  Science  of  Employment 

As  vitally  important  to  the  success  of  a  retail  store  as 
good  location  is  the  art  of  finding  and  keeping  good 
employees.  The  employer  has  a  double  responsibility. 
He  must  find  employees  who  will  help  him  to  make  the 
business  successful.  He  must  also  help  the  employees  to 
make  successes  of  themselves.  The  two  are  inseparable. 
A  good  employee  is  always  one  who  is  making  a  personal 
success  for  himself  in  his  position.  A  poor  employee  is 
not  only  one  who  does  not  help  the  store,  but  also  one 
who  is  a  personal  failure  so  far  as  his  present  position  is 
concerned. 

To  a  very  large  extent  the  welfare  and  prosperity  of 
the  salespeople  and  other  employees  of  a  retail  store  rest 
with  the  efficiency  of  the  employer.  If  he  does  his  work 
well,  they  succeed  and  enjoy  the  happiness  of  success  and 
achievement.  The  aim  of  all  business  is  service  to 
humanity.  An  individual  employer  can  do  no  better  than 
to  select  his  employees  and  develop  them  with  reference 
to  their  potential  usefulness  and  contentment.  Tlirough 
this  method  only  can  the  success  of  the  store  as  a  perma- 
nent institution  be  insured. 

Scientific  employment  aims  at  nothing  more  nor  less 
than  finding  the  right  employee  for  the  right  place,  and 

147 


148  Retail  Store  Management 

by  that  is  meant,  finding  the  employee  who  can  do  the 
work  of  a  certain  position  well,  who  will  take  pleasure 
in  it,  and  who  will  grow  in  it. 

The  Superintendent  of  Employees 

While  employment  of  store  help  is  now  by  custom  one 
of  the  functions  of  the  store  superintendent,  it  should  be 
the  work  of  a  special  division  which  should  be  in  charge 
of  all  matters  growing  out  of  the  relations  of  the  store  to 
its  employees,  including  employment,  education,  develop- 
ment of  efficiency,  discipline,  welfare,  and  so  on. 

The  chief  official  in  charge  of  this  department  should 
rank  in  the  store  organization  as  high  as  the  merchandise 
manager,  the  superintendent  of  buildings  and  equipment, 
or  the  head  of  the  accounting  and  finance  division.  He 
might  be  designated  the  ''superintendent  of  employees," 
''superintendent  of  associates,"  or,  to  borrow  the  English 
term  for  salespeople,  "superintendent  of  assistants." 
This  official  should  be  an  expert  on  employment,  on  educa- 
tion, and  on  welfare  work.  In  concerns  large  enough 
to  demand  subdepartmentalization,  his  subdepartments 
should  be,  respectively,  employment,  education,  records, 
and  welfare  work. 

The  remainder  of  this  book  will  deal  with  the  activities 
of  the  store  along  these  lines.  The  present  chapter  pre- 
sents the  subject  of  employment. 

Analysis  of  Positions  To  Be  Filled 

The  preliminary  step  to  scientific  employment  is  a  thor- 
ough analysis  of  the  requirements  of  each  position  to  be 
filled.  So  far  as  possible,  the  actual  duties  to  be  per- 
formed, the  methods  to  be  used  in  the  performance,  the 
mental  attitude  desired  from  the  person  on  duty,  the  phys- 


Finding  Good  Employees  149 

ical,  mental,  and  moral  strains  imposed,  and  the  require- 
ments of  personality  should  be  clearly  defined. 

It  is  the  experience  of  hundreds  of  the  most  successful 
people  of  all  walks  of  life  that  definitions  lack  their  essen- 
tial quality  until  reduced  to  writing;  hence,  it  is  suggested 
that  every  store  employment  department  manager  should 
seek  to  get  into  writing  a  fairly  definite  notion  of  what  is 
necessary  in  every  position  that  it  is  likely  must  be  filled 
at  some  time  or  other. 

The  object  of  such  definite  analysis  will  be  obvious  at 
once.  After  such  an  analysis  of  any  given  position  has 
been  made,  the  employer  is  in  a  much  better  position  to 
select  just  the  right  type  of  employee  to  fill  the  place  than 
when  the  needs  of  tlie  position  are  only  realized  in  a  gen- 
eral way.  The  analysis  makes  it  possible  to  show  the  new 
employee  just  what  is  expected  of  him  and  how  he  can 
make  good.  Finally,  the  analysis  furnishes  the  basis 
upon  which  the  education  of  the  new  employee  may 
proceed. 

Of  the  duties  assigned  to  the  new  employee,  some,  per- 
haps, he  can  perform  skillfully,  others  only  indifferently 
well,  while  others  he  cannot  do  at  all  or  very  poorly.  A 
little  supervision  preceded  by  conferences  will  quickly 
reveal  the  weaknesses,  the  things  that  should  be  taught. 
Hence  based  on  the  analysis  of  work  and  of  the  employee, 
the  educational  work  can  proceed  without  waste  of  energy. 

Analysis  of  Qualifications  Requieed 

Certain  general  (lualities  are  demanded  in  all  positions, 
such  as  industry,  intelligence,  honesty,  and  good  health. 
Kvery  position  in  a  retail  store  demands  punctuality, 
obedience,  and  courtesy.  Willingness  to  work  and  to 
learn,  cou])le(l  with  scrupulous  honesty  are  desirable  qual- 
ities in  the  whole  field  of  industry.    Good  health  is  obvi- 


150  Retail  Store  Management 

ously  essential,  and,  in  a  system  with  many  employees, 
punctuality,  obedience,  and  courtesy  are  necessary  in 
order  to  insure  a  smooth  running  organization. 

In  addition  to  the  general  qualities  needed  in  all  posi- 
tions, every  position  will  demand  special  qualities  and 
require  the  performance  of  specific  duties.  What  these 
are  for  any  given  position  can  be  determined  only  by  a 
study  of  the  position  itself,  not  only  as  filled  in  the  past 
by  former  employees,  but  also  in  relation  to  the  possibili- 
ties for  greater  efficiency. 

In  order  to  make  clear  what  is  meant  by  analyzing  a 
position  for  the  purpose  of  filling  it  with  the  right  kind 
of  an  employee,  two  typical  forms.  Figures  22  and  23,  are 
presented,  each  giving  the  qualifications  that  might  be 
found  generally  desirable  in  the  positions  of  stock  girl 
and  of  notions  saleswoman,  respectively.  These  forms 
are  intended  to  serve  as  illustrations  rather  than  models. 
The  specific  analysis  for  a  specific  store  might  differ  very 
widely  in  detail  from  either  of  these  two  given  here. 

With  this  analysis  before  him  the  employer  can  effec- 
tively decide  concerning  applicants  for  the  position  of 
stock  girl  which  one  is  best  fitted  for  the  work.  Having 
selected  the  best  one  for  the  place,  the  outline  can  be  used 
as  the  means  of  instructing  the  new  employee  as  to  just 
what  she  is  expected  to  do.  If  she  has  never  been 
employed  in  a  store,  she  will  need  instruction  on  how  to 
do  most  of  the  things  mentioned.  Someone  will  have  to 
show  her  how  to  handle  suits  and  coats,  how  to  brush 
them,  how  to  hang  them  up,  how  to  carry  them,  etc. 

Thus  the  analysis  serves  both  as  a  guide  to  the 
employer  and  to  the  newly  employed  stock  girl.  He 
chooses  her  because  she  seems  to  be  adapted  to  the  work 
as  outlined,  and  she  uses  the  outline  in  preparing  herself 
for  her  work.  If  at  any  time  her  work  is  not  entirely  satis- 


Finding  Good  Employees 


151 


ANALYSIS  OF  POSITION 

Department  (Suits  and  Dresses)      Position  (stook  Girl) 

I.  General  qualities 

(a) 

Willingness  to  work. 

(b) 

Sensible.   Willing  to  learn.   Attentive  to 

instruction.   Oood'memory. 

(c) 

Honest . 

(d) 

Strong  and  healthy. 

Evidences  of  health  and  strength.. 

Good  appearance. 

(e) 

Punctual . 

(f) 

Obedient . 

■(g) 

Alert . 

(h) 

Patient . 

(1) 

Cheerful. 

(J) 

Ambi tious . 

(k) 

At  least  16  years  of  age,  but  not  more  than 

20  (In  conformity  with  law  of  seme  states). 

(1) 

Ccmmon  school  education. 

Ability  to  read,  write  legibly,  and 

spell  common  words  correctly. 

(m) 

Sensibly  dressed  for  work.   Neat  and  clean. 

II   Duties  of 

posi tion 

(a) 

To  keep  the  reserve  stock  in  good  order  all 

the  time. 

(b) 

To  watch  the  sales  stook  carefully  and  supply 

new  goods  from  reserve  as  quickly  as  needed. 

((0) 

To  run  errands  for  the  buyer  or  other  author- 

ized head  of  department. 

(d) 

To  keep  hangers  off  floor,  and  return  goods 

to  cases  when  found  on  chairs  and  tables 

after  they  have  been  displayed  to  customers. 

(0) 

To  help  salespeople  with  customers  during 

rush  hours 

(f) 

To  help  in  dressing  dieplAys. 

(g) 

To  assist  in  marking  and  checking  goods. 

Fia.  22.— Analysis  of  Position— Stock  Girl 


152  Retail  Store  Management 


ANALYSIS  OF  POSITION                        | 

Department  (Notions)               Position  (Saleswoman) 

I .   General  qu 

alities : 

(a) 

Willingness  to  work. 

(b) 

Good  sense.   Expression  of  interest  in  eyes 

and  face. 

(0) 

Honest.   Frank  appearance. 

(d) 

Good  physique. 

1.   Medium  height  and  weight,  ranging  to 

slight  rather  than  large. 

2.   Need  not  be  particularly  strong,  but 

should  be  active. 

3.   Sound  feet. 

4.   Good  eyesight  and  hearing. 

5.   Healthy  appearance. 

(e) 

Punctual . 

(f) 

Obedient.   Quick  to  grasp  and  act  on  sugges- 

tions. 

(g) 

Alert. 

(h) 

Patient . 

(i) 

Cheerful. 

(J) 

AjDbitiou3.>> 

(k) 

Tactful . 

(1) 

Pleasing  personality. 

(m) 

Courteous . 

(n) 

Taste  in  choice  and  use  of  goods  of  notions 

class . 

(0) 

At  least  16  years  of  age,  preferably  between 

18  and  25,  not  over  40. 

II.   Duties  of 

posi tion . 

(a) 

To  keep  sales  stock  in  good  order  and 

attractive  in  appearance,  to  replenish 

from  reserve  stock,  and  to  report  when 

total  stock  IS  falling  low  so  that  the 

store  may  not  be  out  of  stock  entirely 

(b) 

To  madce  sales  to  customers 

This  involves  a  knowledge  of  the  goods  and 

their  adaptability  to  individuals,  and  a 

knowledge  of  salesmanship. 

(0) 

Toco-operate  with  other  departments  by  means 

of  suggestive  salesmanship. 

(d) 

Tb  make  out  sales  slips  properly  when  sales 

are  made,  write  legibly,  spell  correctly. 

ajid  compute  accurately. 

Fio.  23. — Analysis  of  Position — Saleswoman 


Finding  Good  Employees  153 

factory,  reference  may  be  made  to  the  analysis,  and  the 
exact  details  in  which  she  is  erring-  pointed  out.  Having 
an  impersonal  standard  like  that  provided  in  the  analysis, 
she  will  try  to  improve  by  thinking  out  what  she  should 
do  instead  of  imitating  thoughtlessly  what  others  do. 

As  suggested  above,  practically  every  position  in  a 
store  should  be  analyzed  and  the  analysis  in  each  case 
reduced  to  writing  so  as  to  be  available  for  the  use  of 
employer  and  employee  alike.  The  responsibility  for 
making  these  analyses  should  rest  temporarily  with  the 
emplo}Tnent  manager  or  the  superintendent  of  employees, 
if  there  is  such  an  official.  However,  his  work  should  be 
very  largely  that  of  organization  and  planning.  The  real 
content  of  every  analysis  should  come  from  the  persons 
most  closely  associated  with  and  interested  in  the  depart- 
ment, in  the  case  of  salespeople  from  the  buyer,  the  sales- 
people, and  floor  managers.  The  result  in  each  case 
would  therefore  be  a  composite  product  of  the  best  think- 
ing of  all  having  knowledge  of  the  work. 

Sources  of  Applicants 

Where  shall  the  applicants  for  open  positions  be 
secured?  The  following  are  the  common  methods  em- 
ployed to  secure  help  in  retail  stores : 

1.  Selecting  from  among  those  who  come  to  the  store 
in  search  of  employment. 

2.  Selecting  from  among  acquaintances,  or  from  those 
recommended  by  friends  of  the  store.  Some  stores  have 
found  it  desirable  to  seek  the  help  of  their  customers  in 
getting  desirable  applicants  for  open  positions.  There 
are  limits  to  the  efiicacy  of  this  plan,  however. 

3.  Selecting  from  applicants  secured  l)y  advertising  in 
the  local  papers. 


154  Retail  Store  Management 

4.  Securing  high-grade  employees  by  advertising  in 
the  trade  press. 

5.  Getting  the  help  of  elementary  and  high  school 
teachers  and  principals  in  selecting  desirable  young  peo- 
ple about  to  leave  school.  This  method  offers  large  pos- 
sibilities, as  the  movement  for  vocational  guidance 
spreads  through  the  school  systems  of  the  country. 
Employers  should  give  this  source  of  help  closer  atten- 
tion than  has  been  given  in  the  past. 

6.  Taking  the  store  employees  away  from  other  stores 
by  offering  higher  salaries  or  other  inducements.  This 
method  may  be  generally  condemned  if  used  to  a  consid- 
erable extent. 

7.  Keeping  track  of  experienced  and  desirable  sales- 
people as  they  leave  the  store  to  go  into  other  occupa- 
tions, in  order  to  get  them  back  in  case  the  new  venture 
proves  unsatisfactory  to  the  employee. 

8.  Saleswomen  who  leave  the  store  to  marry  and  settle 
down  in  the  vicinity  often  are  willing  and  glad  to  work  in 
the  store  after  marriage  if  given  the  opportunity  to  work 
for  shorter  hours  per  day.  Every  large  store  needs  a 
group  of  salespeople  who  may  be  sent  to  the  busiest  parts 
of  the  store  during  the  busiest  hours  of  the  day.  During 
the  hours  when  business  is  slack,  these  salespeople  can- 
not be  so  valuably  employed.  This  group  of  salespeople 
are  usually  called  the  '' contingent  group,"  or  '' flying 
squadron." 

One  large  eastern  store  has  been  very  successful  in 
getting  the  help  of  its  former  saleswomen,  now  married, 
to  come  to  the  store  during  rush  season  days,  from  the 
hours  of  11 :00  a.  m.  to  4 :00  p.  m.  The  shortness  of  the 
day  permits  the  contingent  saleswoman  to  complete  her 
housework  at  home,  perform  the  work  in  the  store  at  the 
time  that  it  is  needed  most,  and  then  get  home  in  time  to 


Finding  Good  Employees  155 

prepare  dinner  for  her  husband.  The  salary  received, 
generally  a  dollar  a  day,  proves  very  acceptable  to  the 
employee,  and  the  store  is  enabled  to  fill  its  gaps  during 
the  busiest  hours  with  fresh  but  experienced  salespeople. 

Only  a  few  supplementary  comments  need  be  made 
concerning  the  methods  of  getting  applicants  for  posi- 
tions. Other  things  being  equal,  the  applicant  mtli  some 
experience  is  more  valuable  than  the  one  without  any. 
A  few  firms  prefer  young  people  of  no  experience  to  those 
with  some  experience,  but  in  spite  of  the  assertion  made 
that  so  much  of  what  is  learned  in  other  stores  must  be 
unlearned  in  the  particular  store  with  this  policy,  there 
is  abundant  cause  for  following  the  principle  in  most 
cases. 

The  applicant  who  is  already  employed  elsewhere  is 
usually  more  desirable  than  tlie  one  who  is  without  work. 
This  is,  however,  so  superficial  that  each  case  needs  inves- 
tigation to  determine,  on  the  one  hand,  why  the  applicant 
wishes  to  leave  his  present  employer,  and,  on  the  other, 
why  the  unemployed  applicant  is  not  now  at  work. 

Every  desirable  applicant  should  be  invited  to  fill  out 
an  application  blank  whether  there  is  an  opening  avail- 
able or  not.  Such  applications  may  later  serve  as  a 
valuable  source  of  getting  help  when  it  is  needed. 

The  want  ad  can  be  made  more  efficient  than  it  usually 
is  by  stating  in  more  detail  just  what  work  the  employee 
will  be  expected  to  do.  The  average  advertisement  is 
indefinite.  In  consequence  persons  apply  and  take  up 
the  time  of  the  employment  department,  persons  who 
realize  as  soon  as  the  work  is  outlined  to  them  that  they 
are  unsuited  for  it.  The  specific  advertisement  would 
bring  people  who  would  have  the  idea  that  llicy  could 
successfully  do  the  kind  of  work  described.  This  faith 
in  one's  ability  to  do  the  work  oulliiicd,  if  the  work  is 


156  Retail  Store  Management 

fully  understood,  is  a  strong  point  in  favor  of  the  appli- 
cant. 

The  trade  papers  are  now  generally  used  by  stores 
when  in  need  of  buyers,  floor  managers,  advertising  men, 
display  men,  and  the  like.  Only  occasionally  does  one  see 
a  want  ad  in  a  trade  paper  for  good  salespeople.  More 
frequently  one  sees  advertisements  of  salespeople  seeking 
positions.  These  advertisements  are  worthy  of  attention. 
The  fact  that  a  salesman  or  saleswoman  advertises  for 
a  position  through  a  trade  paper  may  be  considered  as 
evidence  that  the  advertiser  is  familiar  with  the  trade 
paper  and  probably  reads  it.  The  salesperson  who  reads 
the  trade  papers,  if  he  possesses  ordinary  good  qualities 
in  other  respects,  is  quite  sure  to  be  a  real  live  wire  and 
a  valuable  person  to  have  in  the  store.  It  is  suggested 
that  retailers  could  profitably  employ  advertising  in 
trade  papers  to  a  much  greater  extent  than  in  the  past  to 
secure  expert  salespeople  as  well  as  other  high  grades 
of  store  help.  Those  who  reply  to  the  advertisements 
may  be  presumed  to  be  the  more  wide  awake  and  intelli- 
gent kind  of  individuals. 

The  Employment  System 

In  the  employment  of  store  employees,  the  so  called 
'*hire-and-fire  system"  has  been  altogether  too  frequently 
the  common  method  of  procedure.  That  this  method  is 
wrong  and  uneconomical  in  the  long  run  everybody 
admits.  Applicants  are  accepted  without  enough  care 
and  are  likewise  dismissed  in  the  same  careless  fashion. 
Unfit  persons  are  blindly  taken  into  the  organization,  only 
to  be  turned  out  after  a  period  of  waste  and  ineffective- 
ness, a  loss  to  both  employer  and  employee.  Incidentally, 
under  careless  management,  the  store  dismisses  many 
employees  ydih.  potential  abilities  of  great  value  to  the 


Finding  Good  Employees  157 

store,  but  probably  wholly  undiscovered  because  of  the 
superficial  study  made  of  each  employee. 

Before  finally  employing  any  store  employee  for  a  per- 
manent position,  each  person  should  be  required  to 
undergo  the  following  routine : 

1.  Come  to  the  employment  manager  for  a  personal 
interview  at  least  once,  and,  if  possible,  more  than  once. 

2.  Fill  out  an  application  blank  in  own  handwriting. 

3.  Take  a  physical  examination  as  prescribed  by  the 
store. 

4.  Enter  emplojTnent  for  a  temporary  period  of  tryout 
and  education. 

The  Application  Blank 

The  application  blank  to  be  filled  out  by  tlie  applicant 
for  a  position  should  cover  the  points  shown  in  Figure  24. 

The  applicant  should  be  asked  to  fill  out  the  form  in 
the  presence  of  the  employer,  ostensibly  so  as  to  give  the 
latter  a  chance  to  explain  and  assist  in  case  any  of  the 
questions  are  not  clear.  Really,  however,  the  way  an 
applicant  proceeds  with  such  a  set  of  questions  as  these 
will,  ordinarily,  give  the  employer  much  valuable  infor- 
mation as  to  the  character  and  personality  of  the  appli- 
cant. During  the  time  that  the  answers  are  being  written 
in,  the  employer  can  note  how  the  applicant  is  dressed, 
and  such  details  as  cleanliness,  neatness,  care  of  person, 
and  so  on.  Many  other  idiosyncrasies,  if  tliey  exist,  are 
likely  to  appear  here,  hence  the  suggestion  that  the  writ- 
ing be  done  in  the  presence  of  the  employer. 

Upon  first  thouglit  it  may  seem  that  the  application 
form  given  above  includes  too  many  questions.  Certainly 
it  contains  many  more  than  the  usual  form  used  in  most 
stores.  But  in  its  brevity  lies  the  weakness  of  the  aver- 
age form  or  binnk.     Tliis  form  when  properly  filled  out 


158 


Retail  Store  Management 


APPLICATION   FOR  POSITION 

Name 

Address  Street  City  Telephone 

Nationality  Religion 

Date  of  birth  Height  Weight 

If  under  21  give  address  of  parents  or  guardian 

Single  or  married 

How  many,  and  who,  are  dependent  upon  you  for  support? 

Ever  employed  in  this  store?  What  department? 

Position  wanted?  Temporarily  or  permanently? 

When  do  you  wish  to  begin?  Salary  expected? 

Names  of  relatives  employed  in  store? 

Positions  held  by  each? 

Whom  shall  we  notify  in  case  of  emergency? 

Address? 

Experience.  Give  names  of  all  places  at  which  you  have  been  employed. 


Employer 


Position  held 


Give  exact  dates  of  employment 


Salary 


Reason  for 
leaving 


Lines  of  merchandise  understood? 

What  lines  of  merchandise  would  you  like  to  work  with  and  why? 

What  foreign  languages  do  you  speak  or  understand? 

How  much  of  last  year  were  you  ill? 

What  was  the  nature  of  illness? 

What  position  do  you  now  hold? 

Why  do  you  wish  to  leave? 

Education 


Schools  attended 


Time  spent  in  attendance 


Work  taken 


What  studies  have  you  taken,  if  any,  which  will  help  you  In  the  position 

you  are  applying  for? 
State  how  each  will  help  you. 
In  school  what  studies  did  you  like  best? 
What  studies  least? 

What  books  have  you  read  during  the  last  six  months? 
What  papers  or  periodicals  do  you  read  regularly? 


Pig.  24. — Application  Form 


Finding  Good  Employees  159 

gives  as  complete  a  history  of  tlie  applicant  as  any  form 
so  far  used.  It  reveals  the  fitness  or  unfitness  of  an 
employee  for  a  certain  position  to  a  very  considerable 
extent. 

The  names  of  pre\^ous  employers  should  be  used  as 
references,  and,  even  where  an  applicant  seems  entirely 
satisfactory,  the  employer  should  get  the  judgment  of 
previous  employers,  not  necessarily  before  employing  the 
applicant,  but  so  as  to  have  as  complete  a  history  as 
possible.  Employers  as  a  class  know  far  too  little  of  their 
employees  both  for  the  good  of  the  business  and  for  that 
of  the  employees.  If  the  judgment  of  former  employers 
is  against  an  applicant  in  any  particular,  the  employer 
needs  to  know  that,  not  in  order  to  dismiss  the  applicant 
from  consideration,  but  in  order  to  guard  against  the 
same  weakness  developing  again.  Thus  an  employee, 
good  in  other  respects,  is  gained  for  the  business,  and  the 
employee  is  helped  by  being  given  work  to  do  that  will 
not  tax  the  weak  characteristics. 

The  business  of  the  superintendent  of  employees  is  to 
make  efficient  men  and  women.  The  business  of  the  em- 
ployment department  is  to  find  the  best  people  available 
and  to  present  complete  facts  in  each  case  that  may  be 
used  as  a  basis  for  the  educational  work  to  follow.  The 
good  qualities  of  an  employee  should  be  fully  utilized, 
and  the  weak  characteristics  should  be  eliminated  or  be 
replaced  by  stronger  ones. 

In  addition  to  the  facts  written  down  on  the  application 
form  by  the  applicant,  the  employment  manager  should 
add  in  an  appropriate  space  on  the  blank,  not  indicated  by 
the  heading,  his  own  personal  judgment  based  on  his  first 
impression  of  the  applicant.  First  impressions  are  gen- 
erally intuitive  and  must  be  considered  of  value,  although 
not  of  enough  value  to  furnish  a   full  basis  for  such  a 


160  Retail  Store  Management 

matter  as  tlie  emploj-ment  of  an  indi\ddual.  The  first 
impression  is  valuable  merely  as  one  factor  among 
several. 

As  the  replies  to  inquiries  sent  out  to  references  come 
in,  these  should  be  attached  to  the  application  form,  and 
the  whole  matter  enclosed  in  a  folder  and  placed  in  the 
emplojanent  department's  files.  In  case  the  applicant  is 
given  a  position  further  information  concerning  his  or 
her  progress  should  be  added  from  time  to  time  showing 
progress  made  in  important  particulars.  Thus  the  file 
can  become  in  time  a  complete  confidential  history  of 
every  employee  in  the  house,  an  invaluable  record  not 
only  for  the  superintendent  of  employees  but  also  for  the 
general  executive  of  the  store. 

Physical  Examination" 

When  an  applicant  for  a  position  has  satisfied  the  em- 
ployment manager  in  the  personal  interviews  and  by  the 
facts  presented  in  the  application  form,  and  it  seems 
likely  that  a  place  can  be  made  for  the  applicant,  he  or 
she  should  be  asked  to  take  a  physical  examination,  either 
conducted  under  the  direction  of  the  store  by  the  store 
physician,  or  by  some  physician  approved  by  the  store. 
The  points  to  be  covered  by  this  examination  will  be 
enumerated  in  the  chapter  on  welfare  work. 

Physical  requirements  of  positions  about  retail  stores 
are  too  frequently  overlooked.  It  is  obvious  that  the  color 
blind  salesman  should  not  be  put  in  the  silks  or  dress 
goods  sections,  but  it  is  not  generally  observed  that  short 
men,  men  of  rather  slight  build,  make  better  shoe  sales- 
men as  a  rule  than  either  very  tall  or  very  heavy  men. 
The  work  in  bending  in  fitting  shoes  is  enormous  on  a 
busy  day.  Six  inches  of  additional  height  or  twenty-five 
pounds  of  additional  weight,  raised  and  lowered  a  couple 


Finding  Good  Employees  161 

of  hundred  times  a  daj^  from  tlie  bending  to  the  upright 
position  makes  a  big  difference  in  the  wear  and  tear  on 
the  salesman.  The  tall  man  or  the  fat  man  has  to  do  so 
much  extra  work  that  he  naturally  grows  tired  more 
quickly  and  consequently  loses  interest  and  his  ability  to 
sell. 

It  really  is  remarkable  that  shoe  dealers  have  not 
installed  platforms  or  raised  floors  upon  which  custom- 
er's chairs  could  be  placed  and  the  customers  seated 
while  having  their  shoes  tried  on  in  the  same  way  as  shoe 
shining  establishments  now  have  their  high  chairs  for 
customers  who  have  their  shoes  blacked.  Note  the  advan- 
tage to  the  bootblack  who  does  the  work.  As  a  matter  of 
good  salesmanship,  it  is  known  that  the  salesman  stand- 
ing has  a  great  advantage  over  the  salesman  bending  over 
or  sitting  down.  If  the  salesman  could  stand  erect  while 
fitting  shoes,  he  could  give  both  his  customers  and  his 
house  better  service. 

If  it  were  urged  that  many  people  come  into  shoe  stores 
merely  to  look,  and  that  it  would  be  difficult  to  prevail 
upon  tliom  to  climb  up  to  the  raised  chairs,  the  store 
could  be  equipped  with  pits  for  the  salesmen  to  work  in 
while  having  the  chairs  on  the  main  floor  as  at  present 
and  on  the  same  level  as  the  main  floor. 

Short  men  likewise  suffer  when  placed  in  positions  that 
require  considerable  reaching  above  the  head.  TJaising 
one's  hands  and  arms  a])ove  the  head  for  a  few  times  is 
considered  splendid  exercise  for  arms,  chest,  and  lungs, 
})nt  prolonged  work  of  this  kind  is  exceedingly  fatiguing. 

Where  goods  are  piled  on  high  shelves,  the  tall  man 
or  woman  has  the  advantage. 

Nearly  all  salesmen  must  stand  or  move  about  on  their 
feet  a  good  share  of  the  time.  Broken  down  arches  in 
the  feet,  varicose  veins,  and  other  aihnents  of  the  feet 


162  Retail  Store  Management 

and  limbs  are  causes  of  a  great  deal  of  suffering  to  sales- 
people, and  if  other  occupations  not  requiring  so  much 
standing  were  to  be  had,  the  applicant  would  do  well  to 
select  from  these  rather  than  go  into  a  store,  unless  a 
cure  of  the  ailment  or  defect  sliould  be  effected. 

Some  sales  positions  require  considerable  strength. 
Frail  persons  should  not  be  placed  in  such  positions  as 
require  the  handling  of  heavy  bolts,  cases,  boxes,  or  what- 
ever the  form  of  goods  are  in.  Other  salesmen  are  so 
full  of  energy  that  they  need  a  department  in  heavy  goods 
to  keep  their  energy  occupied.  To  place  a  man  of  too 
much  energy  of  the  exuberant  tj'pe  in  a  department 
requiring  extreme  carefulness  would  be  to  invite  disaster. 
Other  illustrations  of  like  nature  indicative  of  the  need 
of  considering  the  physique  of  the  salesperson  or  other 
store  employee  in  relation  to  the  work  to  be  done,  will 
occur  to  every  person  with  experience  in  the  retail  busi- 
ness. Thus  the  physical  examination  will  not  only  indi- 
cate the  condition  of  health  and  freedom  from  disease, 
but  also  the  physical  fitness  of  the  applicant  for  the  retail 
store  position. 

A  full,  complete,  physical  examination  as  outlined 
above  is  not  yet  regularly  applied  in  retail  stores,  but  is 
well  established  in  a  considerable  number  of  industries. 
That  retail  stores  have  not  yet  required  complete  exam- 
inations of  applicants  is,  perhaps,  not  surprising,  but  it 
seems  safe  to  assert  that  it  must  soon  form  a  part  of  the 
work  of  the  department  dealing  with  employees  in  nearly 
every  large  retail  establishment.  Every  argument 
advanced  for  physical  examination  in  industrial  concerns 
holds  equally  true  for  retail  stores.  When  the  results  in 
efficiency  in  a  store  due  to  having  an  organization  made 
up  of  individuals  that  are  healthy,  vigorous,  and  happy 
in  their  work  because  employed  in  positions  suited  to 


Finding  Good  Employees  163 

them  are  fully  recognized,  the  movement  for  physical 
examination  of  applicants  for  store  positions  will  move 
forward  rapidly. 

Indeed,  it  seems  quite  likely  that  when  physical  exam- 
inations of  applicants  shall  have  been  found  profitable, 
it  will  be  followed  by  periodical,  perhaps  annual, 
physical  examinations  of  all  employees,  both  new  and 
old.  Thus,  not  only  will  physical  weaklings  be  kept  out, 
but  physical  weakness  will  also  be  kept  out  by  preventive 
measures.  A  few  industrial  concerns  have  already  taken 
this  step.  More  are  considering  it.  Some  retail  stores 
now  have  trained  nurses  who  give  their  attention  to  store 
employees  who  become  ill  or  indisposed.  It  will  not  be 
a  radical  step  to  have  the  general  examination  for  all 
become  the  rule. 

TEST  QUESTIONS 

1.  "What  is  the  object  and  aim  of  scientific  emplojnnent? 

2.  Who  should  employ  the  help  for  a  store? 

3.  "What  preliminary  analysis  should  be  made  of  the  positions 
to  be  filled  ? 

4.  What  preliminary  analysis  slionid  be  inado  of  llie  qualifica- 
tions required  in  a  person  for  a  certain  position? 

5.  Enumerate  eiglit  definite  sources  of  applicants. 

6.  Outline  the  various  steps  of  a  good  employment  system. 

7.  What  information  should  be  called  for  in  Ihe  application 
form  ?    IIow  should  it  be  used  ? 

8.  Indicate  several  ways  in  whicli  a  physical  examination  can 
assist  in  selecting  the  rigiit  person  for  a  position  in  a  retail  store. 


CHAPTER  XIV 
the  remuneration  of  salespeople 

The  Percentage  of  Sales  Paid  to  Salespeople 

The  largest  item  of  expense  in  practically  all  retail 
stores  is  the  pay  roll.  Approximately  60  per  cent  of  the 
total  pa}^  roll  in  large  stores  goes  for  selling  the  goods, 
that  is  to  salespeople.  To  give  an  idea  of  the  importance 
of  the  amount  that  goes  for  selling  there  follows  a  table. 
Figure  25,  showing  the  percentage  of  sales  expense  to 
sales  by  departments,  closely  approximating  lines  of 
merchandise.  The  figures  given  are  from  large  depart- 
ment stores  and  represent  averages  for  the  conditions 
under  which  these  stores  operate.  In  small  towns  and 
in  smaller  stores  where  more  time  must  be  given  to  each 
customer  who  enters,  the  percentage  for  salespeople 
must,  of  course,  be  higher.  Variations  in  wage  standards 
must  likewise  be  considered  in  making  comparisons 
between  local  stores  and  the  figures  given  here.  The 
percentage  on  the  Pacific  Coast  and  in  some  other  western 
towns  is  considerably  higher  than  in  the  older  sections 
of  the  east. 

Working  Out  a  Just  System 

A  salesman's  salary  is  theoretically  and  really  his  share 
in  the  profits  of  the  store,  the  share  he  has  himself  earned 
for  the  store.    Practically,  salaries  are  determined  very 

164 


Remuneration  of  Salespeople 


165 


Line 


Sales  Force 
Only 


All  Labor  Di- 
rectly Charge- 
able to  I>epart- 
ment — Sales- 
people, Buyer, 
Stock  Clerks, 
etc. 


Art  goods   

Books    

Carpets  and  mattings 

China  and  glassware 

Clothing  (men  's  and  boy 's) .  . .  . 
Clothing     (women's     suits    and 

coats)    

Clothing   (misses'  suits) 

Corsets    

Dress  goods 

Furniture  and  bedding 

Furs    

Gloves    

Groceries 

Handkerchiefs 

Hosiery    

Infant 's  wear 

Jewelry,  silverware  

Laces  and  embroideries 

Leather  goods 

Millinery   

Muslin  underwear  

Neckwear    

Notions    

Pictures 

Ribbons   

Shoes   

8ilka  and  Velvets 

Toys 

Trimmings    

Umbrellas    

Underwear  (knit)    

Upholstery 

Waists   

Wash  goods 

Wrappers,  Kimonas    


8 
9 
8 
9 
8 

8 

6 

9 

8 

8 

7 

SVa 

7 

6 

7 

9 

8 

8 

8 

7 

SVa 

8 
10 

8 

8 

8 
10 
9 
7 
7 
9 
7 
8 
7 


FlO.    25. — Expense    for    Snlnries    of    Saloflpeople    ExproRsed    in    Average 
I'orcentages   of   Wales    by    Merchandise   Lines 


166  Retail  Store  Management 

largely  by  market  conditions  of  the  supply  of  salesmen 
and  the  rates  at  which  they  are  willing  to  accept  work. 

The  employment  manager  may  set  before  himself,  or 
may  have  set  before  him,  5  per  cent  of  the  sales  as  the 
maximum  amount  of  the  pay  roll.  Naturally  he  hires 
applicants  for  an  amount  per  week  that  he  believes  will 
fall  w^ithin  the  maximum.  In  some  cases  his  judgment 
fails  him,  in  other  cases  he  succeeds,  and,  if  fortunate 
throughout,  probably  averages  at  5  per  cent  or  less. 

There  is  another  vital  point  to  consider,  however,  and 
that  is  the  salesman's  point  of  view.  Whatever  salary  is 
paid  should,  if  possible,  be  received  with  the  feeling  that 
it  is  a  just  recompense  for  the  labor  performed,  and 
that  when  better  labor  can  be  given,  a  higher  salary  will 
be  received. 

This  introduces  a  big  difficulty  for  the  employment 
manager.  He  must  work  not  only  for  his  firm,  but  also 
for  his  employees.  He  must  attempt  to  be  just  to  both. 
Anything  short  of  justice  to  both  sides  is  likely  to  cost 
him  his  position  on  the  side  of  the  firm,  and  the  goodwill 
of  the  employees  on  their  side. 

The  ideal  method  of  remunerating  salespeople  must  not 
only  be  just  to  the  salesperson,  but  must  be  flexible 
enough  to  permit  of  almost  immediate  recognition  of 
improvements  in  work  done.  As  the  employee  pro- 
gresses, the  salary  should  go  up,  and  when  the  employee 
ceases  to  improve,  the  salary  should  indicate  the  cessa- 
tion of  improvement  by  standing  still  likewise. 

The  usual  methods  of  remunerating  salespeople  are 
either  on  a  time  basis,  that  is,  so  many  dollars  per  week 
or  month,  or  on  a  commission  basis,  a  certain  percentage 
of  all  sales  made. 


Remuneration  of  Salespeople  167 

Time  Rate 

Remuneration  on  the  basis  of  time  is  by  far  the  most 
common.  This  method  has  little  to  recommend  it  except 
its  age  and  the  fact  that  it  is  customary.  In  working  out 
the  time  rates,  the  emplojTnent  manager  realh'-  starts 
with  the  possible  sales  and  then  takes  a  percentage  of 
those  sales  as  the  salary  that  can  be  paid.  If  the  sales- 
person employed  is  successful  in  selling  more  than  antici- 
pated, he  or  she  is  considered  as  entitled  to  an  increase  in 
salary,  but  in  practice,  this  increase  is  too  often  delayed 
as  long  as  possible.  Consequently,  it  is  not  uncommon 
to  find  salespeople  within  the  same  or  similar  depart- 
ments whose  salaries  range  from  2  to  10  per  cent  of  sales. 
Those  who  are  receiving  only  2  per  cent  are  very  much 
underpaid,  while  those  who  receive  10  per  cent  are  getting 
more  than  they  are  worth. 

It  can  be  seen,  however,  that  back  of  the  time  basis 
system  of  paying  salespeople  there  lies  a  fairly  definite 
standard  of  sales  in  proportion  to  salary.  This  suggests 
the  question,  why  not  remunerate  salespeople  out  and 
out  on  the  commission  basis  and  thus  accomplish  directly 
what  is  now  aimed  at  in  an  indirect  manner? 

Commissions 

There  is  no  question  that  the  commission  basis  is  the 
ideal  method  were  it  not  for  a  luimber  of  objections  tliat 
are  hard  to  overcome  in  the  store.  In  t\u\  first  place, 
when  a  store  drops  tlie  plan  of  paying  its  sak'speople  on 
a  time  basis  and  begins  to  pay  them  a  commission  on  tlieir 
sales,  a  good  deal  of  friction  arises  among  the  employees. 
All  become  anxious  to  do  nothing  ])ut  wait  on  custoiners 
and  so  neglect  the  work  that  must  bo  done,  such  as  stock- 
room   work,   keeping   the    department    in    good    looking 


168  Retail  Store  Management 

order,  and  so  on.  In  some  cases  two  or  more  salespeople 
rush  for  the  same  customer,  each  desiring  to  make  the 
sale,  thus  embarrassing-  the  customer  and  creating  illwill 
in  the  customer's  mind  as  well  as  friction  among  the 
employees.  Only  the  more  desirable  goods  will  be  pushed, 
unless  a  complex  system  of  varying  commissions  is 
arranged  to  care  for  this  problem.  Nothing  will  be  done 
to  push  out  goods  that  are  hard  to  sell.  In  fact  the  sales- 
people, in  such  cases  as  this,  usually  struggle  for  the 
chance  to  handle  only  the  most  easily  sold  goods.  Cus- 
tomers are  importuned  to  buy,  and  the  sale  rather  than 
the  service  to  the  customer  is  made  the  central  thing  in 
the  salesperson's  mind. 

While  the  commission  plan  seems  best  from  a  purely 
theoretical  view,  it  is  very  difficult  to  arrange  it  so  as  to 
avoid  the  difficulties  just  named.  In  its  pure  form  it 
seems  that  it  can  hardly  be  used  in  any  but  the  very  large 
or  very  small  stores,  in  the  one  case  where  a  salesperson 
has  only  one  thing  to  do,  as  for  example,  to  sell  handker- 
chiefs all  day  long,  in  the  other,  where  the  salesman  has 
everything-  to  do  and  when  he  realizes  that  the  selling  can 
be  done  well  only  by  having  the  housekeeping  and  other 
work  well  done. 

Combination  of  Time  Rates  and  Commission 

A  combination  of  time  rates  and  commission  seems  to 
work  much  better  than  a  straight  commission.  A  great 
many  stores  follow  the  old  plan  of  giving  special  com- 
mission on  sales  made  in  difficult  lines  of  goods  such  as 
unseasonable  merchandise,  goods  that  must  be  pushed 
in  order  to  get  them  out  of  the  store.  Such  commission 
usually  takes  the  form  of  a  premium  or  extra  fee,  and 
is  called  a  *'P.  M."  or  a  *' spiff."  The  amount  is  usually 
not  large,  but  is  sufficient  to  tempt  the  salesperson  to  use 


Remuneration  of  Salespeople  169 

a  little  extra  energy  in  describing  it  to  the  prospective 
customer. 

Quota  and  Bonus  System 

A  combination  of  the  time  rate  and  a  commission,  or 
rather  a  bonus  computed  as  a  commission  on  sales  above 
a  certain  amount,  set  as  a  quota  for  each  salesperson,  is 
undoubtedly  the  best  method  yet  proposed  for  remuner- 
ating salespeople.  The  bonus  obviates  the  objections  to 
the  straight  time  rate  and  the  tendency  to  limit  the 
amount  of  energy  given  to  the  business.  The  assurance 
that  the  regular  weekly  salary  will  be  received  no  mat- 
ter what  the  sales  are  removes  the  objectionable  feature 
to  the  commission  payment  plan.  Salespeople  will  know 
that  time  expended  in  store  duties  other  than  selling  will 
not  count  against  them  on  pay  day;  hence  they  will  not 
object  so  strongly  to  giving  their  time  and  thought  to 
such  work. 

The  bonus  gives  incentive,  however,  to  get  more  than 
customary  results.  Since  all  sales  beyond  a  certain  point, 
the  limit  of  tlie  quota,  earn  the  bonus,  if  there  is  a  cliance 
of  exceeding  the  bonus,  this  chance  will  be  grasped  by 
many  if  not  most  salespeople.  The  system  thus  secures 
greater  efforts  from  tlie  salespeoph\  shows  up  the  drones, 
makes  the  salespeople  think  about  their  work,  and  results 
in  a  greater  volume  of  l)usineHS  handled  ])y  the  same  or  a 
smaller  number  of  salespeople. 

How  To  Use  the  Quota  and  Bonus  Plan 

In  establishing  tlic  (|iif)la  and  bonus  system  just 
described  above,  certain  practical  details  need  attention. 
In  the  first  place  the  work  of  each  selling  position  needs 
to  be  carefully  analyzed  both  as  to  ordinary  and  unusual 
duties.    (Seo  Chapter  XTV,  "The  Art  of  Employing  Good 


170  Retail  Store  Management 

Salespeople.")  These  duties  should  be  listed  and  the 
salesperson  given  to  understand  that  no  bonus  shall  have 
been  earned  on  sales  made  unless  the  work  in  connection 
with  other  duties  is  satisfactorily  performed.  The  bonus, 
it  should  be  understood,  is  a  premium  not  only  for  sales 
above  quoted  but  also  for  all  work  well  done.  If  the 
stockkeeping  and  other  duties  of  the  store,  a  part  of  the 
salesperson's  duties,  are  not  well  done,  the  bonus  is  not 
to  be  given  at  all. 

The  weekly  quota  should  not  be  placed  too  high,  and 
should  be  made  to  vary  with  the  season,  selling  conditions, 
amount  of  advertising  done,  and  so  on.  It  should  repre- 
sent a  good,  fair  average  of  past  accomplishments  by  good 
salespeople  working  under  similar  conditions.  It  should 
represent  what  the  employee  may  fairly  expect  under 
ordinary  circumstances  from  ordinary  salespeople.  Natu- 
rally it  will  vary  with  the  seasons.  A  weekly  quota  of 
$200  in  July  might  well  be  $400  in  September,  or  even 
more. 

If  the  quota  is  placed  too  high,  it  becomes  difficult  for 
the  salespeople  to  qualify  for  the  bonus,  and,  as  a  conse- 
quence, a  number  will  grow  discouraged  and  will  cease 
trying  to  earn  a  bonus.  It  should  be  entirely  possible  for 
the  salesperson  to  earn  the  bonus.  If  the  quota  is  placed 
too  low,  the  firm  will  lose  the  difference  in  sales  expense 
between  what  it  should  be  and  what  is  actually  taken. 

The  bonus  paid  for  sales  above  the  quota  should  be  a 
percentage  of  such  excess  sales,  but  should  bear  a  lower 
ratio  to  sales  than  the  regular  sales  expense.  Thus  in 
the  increase  in  sales  above  the  average  both  employee  and 
employer  should  profit.  Half  the  customary  sales  per- 
centage is  taken  as  a  fair  bonus  by  several  stores.  For 
example,  if  the  percentage  of  sales  expense  has  been  6 
per  cent,  the  bonus  should  be  3  per  cent  for  the  amount 


Remuneration  of  Salespeople  171 

sold  above  the  quota  for  the  week.  If  it  has  been  5  per 
cent,  then  2i/^  per  cent  should  be  the  bonus  rate.  There 
may  be  exceptions  to  the  practicability  of  following  this 
rule,  but  these  may  be  met  as  they  occur  in  the  individual 
business. 

The  final  result  of  this  combined  svstem  is  a  reduction 
in  selling  cost  to  the  store,  but  increased  earnings  on  the 
part  of  the  employees  due  to  increased  efficiency  in  selling. 
Increased  efficiency,  as  a  rule,  means  greater  interest  in 
the  work,  greater  enjoyment,  and  less  likelihood  of  leaving 
the  employ  of  the  store.  The  main  drawback  to  the  sys- 
tem is  the  amount  of  labor  involved  in  working  out  the 
proper  quotas  for  each  position  and  carrying  them  out 
for  the  year  by  months  or  seasons.  This  is  a  lazy  man's 
objection,  since  the  experience  of  stores  that  have  given 
the  plan  a  thorough  trial  states  that  it  more  than  pays 
for  all  the  extra  labor. 

Helping  Salespeople  To  Understand  the  Quota 
AND  Bonus  System 

In  order  to  succeed  from  11  le  start  the  bonus  system 
must  be  fully  understood  by  the  employees.  They  should 
have  its  facts  clearly  shown  to  them,  its  objects,  its 
details,  and  its  methods  of  operation.  Their  attention 
should  be  drawn  to  tlie  point  that  the  system  will  in  no 
case  cut  down  salaries,  that  the  old  salaries  will  prevail, 
but  that  it  does  present  an  opportunity  to  gain  increases 
in  salary  through  increased  efficiency  in  selling.  It  needs 
to  be  pointed  out  that  no  bonus  can  l)e  paid  unless  all 
required  work  in  addition  to  selling  is  well  done.  Tliere 
must  be  no  shirking  of  any  duty,  nor  taking  advantage 
of  any  other  salesperson. 

Finally,  each  salesperson  should  liave  placed  before 
him  a  schedule  of  his  quotas  so  that  what  must  be  done 


172  Bctail  Store  Management 

to  earn  a  bonus  can  be  easily  determined.  If  the  quotas 
are  not  properly  computed,  the  salesperson  should  have 
the  right  of  appeal  to  the  employment  manager  or  super- 
intendent of  employees,  and  as  indicated  in  Chapter  XVII 
of  this  book,  there  should  be  some  final  board  to  deter- 
mine uncertain  and  unsettled  cases  in  as  equitable  a 
manner  as  possible.  But,  where  possible,  the  employ- 
ment manager  should  have  his  reasons  for  each  quota 
so  well  established  that  he  can  satisfy  not  only  ques- 
tioning employees,  but  also  the  managers  or  owners  of 
the  concern. 

In  connection  A\dth  the  bonus  system  there  should 
always  be  an  educational  system  that  will  show  employees, 
who  are  not  able  to  help  themselves,  how  to  earn 
the  bonus.  The  educational  w^ork  needed  in  this  system 
will  be  fully  described  in  the  next  chapter. 

Miscellaneous  Forms  of  Remuneeation 

There  are  many  other  ways  of  remunerating  sales- 
people besides  those  described  above.  For  example,  the 
opportunity  to  buy  merchandise  from  the  store  at  a  dis- 
count, a  privilege  almost  universally  given  employees, 
is  a  form  of  salary  to  the  extent  that  goods  are  pur- 
chased and  discounts  received.  In  many  small  stores  it 
is  customary  for  the  employer  to  make  gifts  to  the 
employees  at  Christmas  and  even  at  other  times,  some- 
times in  cash,  sometimes  in  merchandise  of  an  appro- 
priate nature.  A  successful  merchant  in  a  small  town 
having  about  thirty  employees  and  paying  them  on  a  time 
basis,  puts  extra  coins  in  the  pay  envelope  of  employees 
that  have  distinguished  themselves  in  any  way  during 
the  week  by  special  service  for  the  store.  The 
amounts  are  frequently  a  25  cents,  50  cents,  or  a  dollar, 
not  very  much,  to  be  sure,  but  coming  as  a  sign  of  the 


Remuneration  of  Salespeople  173 

employer's  appreciation,  it  brings  a  strong  response  of 
good  will  from  the  employees. 

Welfare  provisions,  which  will  be  described  later  on, 
must  be  considered  from  one  standpoint  as  part  of  the 
salespeople's  remuneration.  Life  insurance,  pensions, 
physical  examinations,  medical  treatment,  etc.,  when  paid 
for  by  the  store  are  clearly  salary  features  and  are  so 
considered  by  most  salespeople.  I  have  many  times 
heard  salespeople  say  that  of  certain  concerns  having 
well-developed  welfare  departments  that  they  could  get 
higher  salaries  in  other  concerns,  but  that  the  welfare 
provisions  more  than  evened  up  the  difference.  It  is 
not  only  the  direct  salary  that  counts,  then,  with  the 
employees,  but  also  the  conditions  offered  surrounding 
the  work. 

Profit-Sharing  Plans 

The  bonus  system  described  above  w^orks  splendidly 
for  the  salespeople,  but  does  not  offer  any  opi)ort unity 
to  the  40  per  cent  of  store  workers  who  do  not  sell  goods. 
For  these  there  should  also  be  an  opportunity  to  gain 
better  rewards  for  performing  better  thaii  average  serv- 
ices. Profit  sharing  offers  the  best  proposed  plan  to 
reach  these  workers.  In  fact,  some  stores  find  some  form 
of  profit  sharing  best  for  all,  inchiding  salespeople.  There 
is  strong  argument  in  favor  of  it. 

Profit  sharing  is  carried  on  in  several  different  ways, 
the  commonest  being  as  follows: 

1.  Of  the  net  profits  for  the  year  after  ;ili  expenses 
and  salaries  of  employees  and  of  management  are  i)aid, 
and  after  all  replacements  and  reserves  are  provided 
for,  the  share  to  go  to  capital  is  first  taken  out,  say  G 
or  10  per  cent  of  the  capit.il  invested.  Whatever  remains 
is  distributed  among  th(!  employees. 


17-i  Retail  Store  Management 

2.  Of  the  net  profits  for  the  year  division  is  made 
into  three  equal  parts,  one  to  go  to  capital,  the  second 
to  the  management,  and  the  third  to  labor,  or  to  the 
employees.  Since  the  management's  share  is  accounted 
for  under  the  first  method  in  the  form  of  salaries,  the 
main  differences  between  the  two  methods  is  that  in 
the  first  a  limited  percentage  is  taken  for  the  share  of  the 
firm's  capital,  while  in  the  second,  capital  and  labor 
share  alike. 

3.  Of  the  total  net  profits  of  the  concern  for  the  year 
the  management  merely  sets  aside  an  arbitrary  amount 
to  be  distributed  among  the  employees. 

Under  the  first  two  methods,  justice  demands  that  the 
workers  should  know  just  what  the  financial  status  of  the 
concern  is  at  least  once  a  year.  Under  the  third  method, 
the  division  is  wholly  in  the  hands  of  the  managers. 
They  assume  the  responsibility  on  any  given  year  of 
judging  what  shall  be  distributed. 

The  best  method  of  distribution  of  profits  to  employees 
seems  to  be  on  the  basis  of  salary  received.  Thus  an 
employee  getting  $20  a  week  will  receive  twice  as  much 
in  the  distribution  of  the  profits  as  one  getting  $10. 
Assuming  that  the  salaries  are  justly  rated,  this  method 
of  distribution  is  the  most  fair  to  all  concerned. 

The  distribution  on  the  basis  of  salaries  received  rather 
than  on  sales  made  or  some  other  base  makes  it  possible 
to  reward  every  employee  in  the  house.  The  only  objec- 
tion to  this  being  that  the  drones  get  it  just  the  same 
as  the  liveliest  workers. 

Profit  sharing,  as  outlined  above,  requires  team  work 
and  the  cooperation  of  the  employees.  It  tends  to  draw 
the  employees  closely  to  the  store,  and  those  directly 
concerned  in  the  success  of  the  business. 

To  serve  most  successfully,  the  distribution  of  profits 


Remuneration  of  Salespeople  175 

should  be  made  every  six  months,  if  possible.  A  year 
between  distributions  is  too  long  to  wait.  Salespeople 
Lave  short  memories  and  are  very  ready  to  discount  the 
future  when  under  temptation  to  shirk  or  let  w^ork  slip 
by.  If  the  distribution  is  made  every  six  months,  the 
amount  will  not  be  as  large,  of  course,  as  at  the  end  of 
a  year,  but  should  be  large  enough,  if  the  business  is 
successful,  to  make  the  amount  seem  worth  while  work- 
ing for  even  by  the  lowest  paid  employees. 

Some  writers  and  thinkers  on  the  subject  of  profit 
sharing  urge  that  it  is  wrong  in  theory  since  it  is  one- 
sided. It  should  provide,  so  they  claim,  for  the  sharing 
of  losses  as  well  as  profits.  Profit  sharing  to  them  means 
sharing  the  fortunes  of  the  business  whether  they  be 
good  or  bad.  This  view  may  be  correct  in  theory  but 
is  wholly  unpracticable ;  hence,  according  to  their  defini- 
tion of  profit  sharing,  profit  sharing  can  never  be  real- 
ized. It  can  hardly  be  expected  that  laborers  such  as 
salespeople  or  other  employees  in  retail  stores  can  ever 
be  expected  to  have  business  losses  made  up  by  reduc- 
tions of  salaries  or  from  their  pockets.  Not  only  could 
they  not  meet  such  demands,  but  the  need  for  labor 
is  so  universal  that  they  wouldn't  have  to,  since  other 
employers  would  buy  their  services  at  regular  rates  at 
any  time  that  any  concern  should  attempt  to  reduce 
wages  below  this  point  in  order  to  make  up  losses  in  the 
business. 

Purposes  of  Profit  Sharing 

The  main  purpose,  the  point  overlooked  by  the  critics,  of 
profit  sharing  is  to  serve  as  a  device  to  get  the  employees 
to  take  a  keen,  active  interest  in  the  concern.  It  is  in 
fact,  a  premium  paid  I'or  extra  services,  for  a  stronger 
loyalty,  for  more  constructive  thinking  for  the  concern. 


176  Retail  Store  Management 

To  offer  the  employee  a  share  of  the  profits  of  the  concern 
is  an  easy,  concrete  proposition  that  stirs  the  mind  of 
the  employee  to  think  for  the  same  thing  as  the  employer 
thinks — profits.  What  the  employee  finally  gets  is  just 
plain  remuneration  for  his  extra  work  of  either  mental 
or  physical  character;  the  amount  of  the  remuneration 
depending  upon  the  success  of  the  concern,  the  share  the 
employer  agrees  to  give,  and  the  method  of  distribution 
among  the  various  employees. 

The  proposal  to  share  profits  at  the  end  of  six  months 
or  a  year  leaves  an  indefinite  idea  in  the  mind  of  the 
employer  as  to  the  amount  to  be  shared.  The  employer 
may  make  the  most  of  this  indefiniteness  by  showing  that 
the  success  of  the  concern  will  depend  entirely  upon  how 
well  the  employees  do  their  work,  in  other  words,  that 
the  share  of  profits  will  depend  upon  the  industry  and 
resourcefulness  of  the  employees  themselves.  This,  for 
some  employees,  is  the  best  sort  of  incentive  possible. 
Hence,  whether  the  profit  sharing  proposed  here  is  really 
profit  sharing  or  not  from  a  theoretical  standpoint  is  not 
so  important  as  the  fact  that  the  method  proposed  here 
does  'promote  the  interests  of  the  firm. 

Thus  it  is  evident  that  the  efficiency  of  a  store  can  be 
promoted  or  retarded  to  a  considerable  degree  by  pieans 
of  the  system  of  remuneration  which  is  used.  The  em- 
ployee's self-interest  which  centers  in  the  wage  must  be 
recognized.  Certain  principles  of  management  are 
clearly  established.  Promotion  in  rank  and  advances  in 
wages  must  be  based  on  merit.  If  possible,  there  should 
be  a  direct  causal  connection  between  what  the  employee 
does  and  his  wage.  This  relation  can  be  established  by 
means  of  some  kind  of  commission,  bonus,  or  profit-shar- 
ing plan.  The  more  definite  this  plan  and  the  more 
immediate  the  reward,  the  more  effective  is  the  system. 


Bemuneration  of  Salespeople  177 

Merit,  stimulation,  and  direct  reward  are  powerful 
factors  in  an  effective  system  of  remuneration  for  store 
employees.  The  exact  methods  for  utilizing  these  forces 
vary  with  conditions,  but  the  principles  are  permanent, 
because  they  are  founded  on  certain  tendencies  in  human 
nature  itself. 

TEST  QUESTIONS 

1.  About  what  fraction  of  retail  store  expenses  does  the  pay 
roll  represent? 

2.  Outline  the  usual  basis  for  remunerating  store  salespeople. 

3.  What  are  the  chief  objections  to  time-rate  compensation? 
How  does  it  affect  costs? 

4.  "What  are  the  objections  to  a  straight  commission  basis  ? 

5.  What  is  meant  by  "spiff"?    Illustrate. 

6.  Explain  the  fundamental  principles  of  a  quota  and  bonus 
system. 

7.  How  is  the  quota  determined? 

8.  What  are  the  three  most  commonly  used  plans  of  profit 
sharing? 

9.  What  motive  or  purpose  should  dominate  a  profit-sharing 
plan? 

10.  Give  some  miscellaneous  forms  of  extra  compensation  that 
are  used  for  remunerating  store  salespeople. 


CHAPTER  XV 
education  for  salespeople 

Apprenticeships  in  the  Past 

Fifty  years  ago  and  before,  there  was  but  one  way 
to  become  a  retail  store  worker,  and  that  was  through 
apprenticeship.  An  agreement  had  to  be  made  witli  some 
merchant  before  a  boy  couUl  enter  a  store,  the  terms 
often  being  that  the  boy  was  to  give  his  time  and  service 
for  a  period  varying  in  different  communities  from  three 
to  five  and  even  seven  years,  during  which  he  was  to 
receive  but  little  or  no  salary.  In  fact,  in  some  cases 
the  merchant  was  paid  a  good  sum  for  taking  a  youtli 
as  an  apprentice.  In  return  the  merchant  bound  himself 
by  the  contract  to  give  the  boy  general  experience  in  all 
departments  of  storekeeping  and  to  teach  him  as  much 
as  possible  about  the  business. 

As  a  consequence  of  the  apprenticeship  plan,  when 
properly  carried  out,  the  boy  who  had  spent  three  to 
seven  years  with  a  good  merchant  graduated  at  the  end 
of  the  period  with  a  very  fair,  practical  knowledge  of 
the  retail  business  and  was  quite  ready  to  perform  the 
duties  of  a  retail  salesman  in  a  satisfactory  way  both 
to  the  employer  and  the  store's  customers. 

Whatever  else  may  be  said  either  for  or  against  it,  as 
applicable  to  stores  of  the  present  time,  it  must  be 
admitted  that  the  apprenticeship  system  served  its  pur- 

178 


Education  for  Salespeople  179 

pose  remarkably  well  in  its  time.  Through  this  system 
of  training  all  merchants  had  come,  and  as  a  result  the 
retailers  and  retail  salespeople  as  a  class  possessed  a 
good  knowledge  of  the  principles  of  the  business  as  it 
was  then  conducted. 

For  one  reason  or  another  the  apprenticeship  system 
in  retail  stores  broke  down  in  this  country  about  the 
time  of  the  American  Crvil  War.  The  west  opened  up 
rapidly.  Margins  for  dealers  were  large.  The  popu- 
lation of  the  country  increased  at  an  enormous  rate. 
More  retail  dealers  and  retail  salespeople  were  needed 
than  the  old  apprenticeship  system  could  supply.  Conse- 
quently men  without  experience  or  knowledge  of  retailing' 
began  to  come  into  the  business  and,  since  the  compe- 
tition was  not  so  keen  as  in  the  old  and  well-settled 
areas,  some  were  able  to  show  splendid  success.  Young 
women  were  employed  to  take  the  places  for  which  young 
men  could  not  be  found,  and  their  services  were  found 
very  satisfactory,  not  only  because  of  the  quality  of  their 
work,  but  also  because  they  were  ready  to  accept  very 
much  lower  salaries.  Thus  with  the  breakdown  of  tlie 
apprenticeship  system,  female  salespeople  began  to  be 
employed  in  retail  stores  in  large  numbers,  particularly 
in  the  larger  cities. 

At  the  present  time  there  is  probably  not  a  single  store 
in  the  country  that  has  any  form  of  the  old  ajtprcntice- 
8hip  system  still  in  use.  In  fact,  it  would,  probably,  not 
prove  entirely  satisfactory,  unless  consirloral)ly  modified, 
oven  if  it  were  possi])le  to  return  to  it.  The  apprentice- 
ship system,  pure  and  simple,  was  an  effective  method 
of  education  at  the  time  when  retailing  was  far  more 
simple  than  it  is  to-day,  wIh'H  sources  of  supply  were 
few,  and  when  demands  of  customers  were  limited  within 


180  Retail  Store  Management 

narrow  bounds  as  to  kinds,  qualities,  and  quantities  of 
merchandise. 

Peksonal  Instruction 

All  this  is  changed  to-day.  As  a  result,  the  person 
who  would  understand  the  retail  business  now  must  no 
longer  depend  upon  his  experience  and  observation 
within  some  store  alone.  Experience  continues  to  be  an 
invaluable  factor,  but  it  is  now  only  one  factor  in  the 
complete  education  of  a  retailer.  He  who  wants  to  know 
the  retail  business  thoroughly  to-day  must  be  a  good 
deal  of  a  student.  He  must  not  only  observe  and  gain 
by  practice,  but  he  must  also  inquire  of  others,  read 
widely  in  the  literature  of  his  trade,  and  think. 

A  complete  education  for  retailing  to-day  must  include 
intensive  study  of  the  experience  of  others  as  formulated 
and  set  dovm  in  print  in  trade  papers  and  textbooks.  The 
route  to  success  to-day  is  not  through  experience  alone, 
but  through  experience  and  schooling. 

In  Europe  the  apprenticeship  method  of  training  for 
the  retail  business  still  prevails,  but  it  has  been  modified 
considerably  in  certain  countries  by  the  introduction  of 
various  educational  helps,  such  as  night  commercial 
schools,  day  classes,  and  part  time  vocational  schools. 
These  educational  courses  are  as  a  rule  pursued  during 
the  period  of  apprenticeship  and  are  now  considered  a 
part  of  it.  We  may  learn  much  of  value  from  the  methods 
followed  in  these  older  countries. 

It  is  noteworthy  that  a  very  large  number  of  the  most 
successful  merchants  of  to-day  began  their  careers  when 
boys  as  apprentices  in  retail  stores.  Many,  indeed,  served 
their  apprenticeships  in  Europe.  To  their  apprentice 
training  these  men  added  study  and  thought  on  their  own 
accord  and  thus  rounded  out  their  retailing  education. 


Education  for  Salespeople  181 

It  may  not  be  too  much  to  say  that,  while  the  appren- 
ticeship training  no  longer  prevails  in  this  country,  effi- 
cient present-day  American  storekeeping  had  its  foun- 
dations in  the  apprenticeships  either  of  the  past  in  this 
country  or  of  some  other  land. 

Retailing  of  to-day  is  making  no  definite  provision  for 
the  education  of  retailers  and  of  retail  salespeople  of 
to-morrow.  A  little  has  been  done  here  and  there,  but 
the  problem  so  far  as  the  masses  of  retail  employees  is 
concerned  is  still  untouched. 

Something  of  the  method  of  the  apprenticeship  still 
prevails  in  some  stores,  in  that  new  employees  are  given 
considerable  instruction  by  their  superiors.  This  instruc- 
tion is,  \vithout  doubt,  the  best,  so  far  as  it  goes,  that 
can  be  had.  This  is  the  only  form  of  education  now 
offered  by  the  great  majority  of  stores.  The  weakness 
of  present  day  instruction  of  this  kind  is  that  there  is 
too  little  of  it  and  that  it  is  often  very  poorly  presented. 
Store  managers  and  heads  of  departments  are  busy 
people.  Lacking  the  obligations  prescribed  in  the  old 
apprentice  contracts  or  indentures,  they  confine  the  in- 
struction largely  to  the  most  necessary  matters,  rarely 
going  into  detail  or  explaining  the  underlying  theory  or 
principle. 

Some  managers  must  be  credited  with  a  desire  to  help 
their  employees  to  develop,  but  they  seem  to  lack  the 
ability  to  teach  others.  Lucky  is  the  boy  or  girl  store 
employee  who  happens  to  come  under  tiie  direction  ol'  a 
manager  who  not  only  is  willing  to  give  time  to  educate 
his  assistants  but  who  also  has  the  teaching  ability.  No 
matter  what  other  forms  of  education  are  to  l)e  considered 
in  training  employees,  the  important  of  the  educational 
work  of  the  manager  or  department  liead  should  jiot  be 
underrat(!d.      Wliat    is    needed    is    that    more    definite 


182  Retail  Store  Management 

responsibility  should  be  placed  upon  this  official  for 
educational  results  and  that  he  should  be  chosen  for  his 
position  not  only  for  his  special  knowledge  and  ability 
as  a  merchandiser,  but  also  for  his  power  to  impart  that 
knowledge  and  ability  to  others. 

The  personal  instruction  of  the  manager  or  depart- 
ment head,  instead  of  being  the  only  source  of  instruc- 
tion, should  be  the  finishing  course  for  the  employee. 

Technical,  Class  Instruction  in  Retailing 

A  few  beginnings  have  been  made  towards  the  develop- 
ment of  a  more  complete  education  for  retail  employees. 
Aside  from  personal  and  individual  assistance,  these 
beginnings  have  nearly  always  taken  the  form  of  a 
school  or  class.  Thus,  several  large  stores  all  over  the 
country  have  found  it  profitable  to  give  the  most  elemen- 
tary instruction  concerning  store  system,  proper  dress, 
correct  stockkeeping,  the  handling  of  sales  slips,  and 
routine  of  selling  merchandise  by  the  class  method.  New 
employees  are  brought  together  in  a  group  and  shown 
how  to  perform  the  work  required  of  them  and  then  are 
required  to  ' '  recite ' '  what  has  been  taught  them  by  mak- 
ing out  the  sales  slips  before  the  instructor. 

Usually  this  elementary  instruction  covers  a  period  of 
from  one  to  two  days.  If  the  employee  does  not  compre- 
hend the  system  at  the  end  of  two  days'  instruction,  he 
or  she  is  usually  dismissed.  In  all  stores  the  expense  of 
the  instructor  is  borne  by  the  store.  In  some  stores  the 
prospective  employees  who  attend  as  students  are  paid 
for  the  time  in  attendance,  while  in  other  stores  they  are 
not.  In  still  other  cases,  where  a  two-day  course  of 
instruction  is  given,  the  store  pays  the  wages  of  one  day 
and  the  employee  contributes  his  time  for  the  other  day. 


Education  for  Salespeople  183 

Subjects  To  Be  Taught  Salespeople 

A  few  stores  have  carried  the  elementary  instruction  of 
their  employees  farther  by  requiring  those  who  are  defi- 
cient in  the  common  branches  to  attend  classes  at  certain 
hours  per  week  for  a  period  of  a  few  months  in  penman- 
ship, spelling,  arithmetic,  and  language.  Ordinary  public 
school  textbooks  as  a  rule  do  not  present  matter  of  specific 
help  to  the  youth  who  is  to  go  into  a  retail  store. 

Frequently  the  boy  or  girl  on  coming  into  the  store 
seems  to  be  at  a  loss  when  called  upon  to  perform  actual 
business  operations  in  arithmetic,  even  though  they  be 
very  simple.  A  good  review  of  the  subject  with  examples 
used  such  as  occur  in  the  practice  of  the  store  has  been 
found  very  advantageous  to  both  store  and  employee. 

In  the  same  manner,  the  new  employees  are  taught  to 
spell  correctly  the  names  of  all  merchandise  in  the  store, 
the  names  of  the  streets  in  the  town,  and  other  commonly 
used  words,  to  write  legibly,  to  punctuate  correctly,  and 
to  speak  grammatically.  In  some  cases  instruction  is 
given  in  writing  simple  business  letters. 

A  still  smaller  number  hav^e  begun  to  give  special  atten- 
tion to  the  training  of  their  employees  in  such  important 
matters  as  salesmanship,  merchandise,  hygiene,  and  other 
subjects  tending  to  develop  ))ersonal  selling  cfnciency. 
Though  probably  less  than  a  hundred  stores  are  at 
present  time  actually  giving  their  employees  instruetion 
along  these  lines  in  a  thorough  fasliion,  many  other  hun- 
dreds are  considering  the  advisaliilit y  .•iiwl  the  possil)le 
methods  of  starting  such  educational  courses.  The  fuiure 
will  certainly  see  a  very  great  development  along  these 
lines,  for  it  is  throuirh  erlucation  of  this  kind  that  snb- 
stantial  progress  can  be  made  in  efficient  retailing.  Kxpe- 
rienee  ])lus  instruction  proj)erly  combined  spell  sneeess  in 
retailing  as  in  any  other  line  of  human  work. 


184  Retail  Store  Management 

It  is  now  fairly  well  established  in  the  minds  of  people 
who  have  given  the  matter  consideration  that  present  day 
retailing  demands  of  its  workers  a  special  knowledge  of 
the  merchandise  that  is  to  be  handled  and  sold,  a  special 
knowledge  of  human  nature  and  the  methods  of  sales- 
making,  and  a  special  knowledge  of  the  retail  store  as  an 
organization  of  cooperating  individuals,  securing  its 
results  largely  through  well-ordered  team  work. 

Knowledge  of  the  Goods 

Knowledge  of  the  merchandise  such  as  required  of  the 
retail  salesman  includes  every  fact  of  interest  to  cus- 
tomers, such  as  uses  of  each  article,  purposes  for  which 
it  is  best  suited,  best  methods  of  using,  together  with  its 
qualities  of  producing  satisfaction,  durability,  beauty, 
style,  comfort,  safety,  purity,  etc.  Obviously,  the  sales- 
man must  be  able  to  explain  the  qualities  of  his  goods 
by  reference  to  their  structure,  the  materials  used  in  the 
making,  methods  of  making,  the  makers  and  their  repu- 
tation, and  the  advantages  and  disadvantages  of  his  own 
goods  compared  with  the  goods  of  other  makers.  If  the 
qualities  of  the  merchandise  can  be  demonstrated  by  tests 
of  any  kind,  the  salesman  should  be  an  expert  in  applying 
them.  As  the  final  representative  of  the  system  of  pro- 
duction  to  the  consumer,  the  retail  salesman  should  know 
every  step  taken  in  making  the  merchandise  and  should 
be  able  to  explain  the  significance  of  each  process  to  the 
consumer.  In  short,  the  salesman's  knowledge  should 
cover  everything  about  the  goods  he  sells  from  earliest 
beginnings  in  structure  to  final  use.  Anything  short  of 
this  is  a  fundamental  cause  of  poor  sales  service  and 
unsatisfactory  retailing  from  the  standpoint  of  the  public 
as  much  as  from  the  standpoint  of  retailers  themselves. 

Obviously,  education  of  some  kind  is  necessary  if  retail 


Education  for  Salespeople  185 

salespeople  are  to  acquire  such  comprehensive  knowledge 
of  the  goods  they  are  to  sell.  Experience  with  the  goods 
may  bring  some  facts  to  the  mind  of  the  salesperson,  hut 
nothing  short  of  definite  instruction  will  provide  the 
larger  part  of  the  information  needed.  That  the  majority 
of  salespeople  nowadays  do  not  possess  this  knowledge 
should  not  be  taken  as  proof  that  they  do  riot  need  it. 
The  greatest  weakness  in  retailing  to-day  is  the  ignorance 
of  the  salesperson  behind  the  counter. 

Knowledge  of  Human  Nature  and  Salesmanship 

Knowledge  of  human  nature  and  of  sales  methods  is 
also  to  be  gained  by  instruction.  A  few  fundamental, 
elementary  facts  of  psychology  should  be  taught  in  appli- 
cation to  the  selling  of  particular  lines  of  merchandise. 
Among  these  facts  there  might  be  found  the  following: 

1.  Sales  are  made  only  to  persons  who  desire  or  want 
goods. 

2.  Desire  for  an  article  depends  upon  the  presence  of 
favorable  ideas  about  that  article  in  the  customer's  mind. 

3.  The  ideas  are  acquired  through  the  customer's 
senses,  his  sight,  hearing,  smell,  taste,  and  touch,  in  con- 
junction with  his  recollections  of  past  experiences  with 
similar  goods. 

4.  Tlirough  the  presence  of  ideas  favorable  to  an 
article,  a  feeling  of  desire  for  it  is  aroused,  wliicli  when 
strong  enough  causes  the  customer  to  decide  to  l)uy. 

5.  Salesmanship  is  nothing  more  uor  less  tlian  pre- 
senting ideas  to  the  customer's  mind  in  the  order  and 
manner  that  are  most  likely  to  gain  for  them  a  favoral)l(; 
feeling.  Thus,  the  salesperson  who  applies  his  jjsy- 
chology  must  become  a  conscious  student  of  his  cus- 
tomer's point  of  view.  Tfe  presents  the  facts  about  the 
merchandise  that  he  thinks  will  interest  his  customer,  ho 


186  Retail  Store  Management 

watches  his  customer  for  any  expression  indicating  the 
probable  progress  the  ideas  presented  are  making  in  his 
customer's  mind,  and,  if  on  the  right  track,  pushes  the 
sale  to  a  close ;  while  if  the  ideas  presented  prove  unfav- 
orable, he  draws  on  his  resources  of  knowledge  about  the 
goods  for  other  lines  of  argument  and  tries  again. 

Steps  in  the  Sale 

Salespersons  should  recognize  distinctly  that  every  sale 
contains  certain  definite  elements  which  may  be  class- 
ified as : 

1.  The  approach. 

2.  The  demonstration. 

3.  The  order. 

Some  suggestions  can  be  given  for  all  three  of  these 
steps  though,  of  course,  perfection  in  their  application 
is  an  art  which  is  acquired  only  as  the  result  of  much 
study  and  practice.  Every  salesperson  should  feel  that 
the  first  step  in  the  sale  consists  in  gaining  the  favorable 
attention  of  the  customer.  Simple  instructions  can  be 
given  regarding  the  manner  of  approach,  both  in  action 
and  in  word.  The  manner  should  not  be  too  eager  nor 
too  insistent,  rather  of  expectation  and  readiness  to  serve. 
The  habit  of  looking  pleasant  and  of  reflecting  a  feeling 
of  welcome  can  be  acquired.  A  pleasant  tone  of  voice, 
one  that  rings  sincere  and  inspires  confidence,  can  be 
cultivated.  Some  thought  may  well  be  given  to  the 
phraseology  of  opening  sentences.  One  will  readily  note 
the  difference  when  accompanied  by  proper  intonation 
of  the  voice  of  the  following  introductions:  ''Anything 
to-day?"  and  "May  I  be  of  service  to  you  I" 

The  salesperson  should  be  keenly  alert  during  the 
approach  to  size  up  the  customer.  He  can  be  instructed 
to  look  for  certain  points  that  will  aid  in  making  the  sale. 


Education  for  Salespeople  187 

If  the  customer  is  wealthy  or  distinctively  dressed,  the 
salesperson  will  emphasize  stjie,  quaUty,  and  similar 
elements  of  salability ;  if  economical,  price  and  durability 
may  be  featured.  If  the  person  is  evidently  in  a  hurry, 
avoid  long  explanation.  These  are  but  a  few  suggestions 
as  to  what  to  look  for  at  the  very  beginning. 

During  the  demonstration  the  salesperson  should  again 
have  a  clear  conception  of  effective  sales  methods.  Do 
not  waste  much  time  asking  questions.  Start  to  show 
something.  Generally,  the  best  results  are  obtained  when 
goods  are  shown  first  at  about  the  price  the  person  wishes 
to  pay,  or  can  pay.  A  good  salesperson  may  often  work 
up  to  better  quality  from  that  point  without  giving  the 
initial  price  shock  that  would  follow  if  the  higher  priced 
goods  were  shown  first.  If  the  customer  makes  no  definite 
request,  the  salesperson  must  exercise  judgment  as  to 
where  to  begin  and  then  work  up  or  down. 

All  goods  should  be  presented  in  the  best  possible 
manner.  Some  need  to  be  placed  on  the  person  or  in 
her  hands  as  soon  as  possible.  Others  may  be  demon- 
strated or  explained  first  so  as  to  bring  out  and  emphasize 
distinctive  qualities.  The  use  of  positive  phrases  will  aid 
greatly  during  the  steps  of  the  sale  "This  cloth  is  fast 
color"  is  better  than  "This  cloth  will  not  fade,"  or  "This 
cloth  is  not  supposed  to  fade."  Tlic  habitual  and  intelli- 
gent use  of  positive  suggestion  is  a  powerful  sales  device. 
Tlirougliout  the  demonstration  the  sales])erson  should 
skillfully  arouse  desire  in  the  mind  of  the  buyer. 

Finally,  tlu;  salespersons  should  be  instructed  in  some 
effoctive  methods  of  closing.  They  should  be  stiirnilated 
to  think  along  that  line.  It  is  often  nceessary  to  aid  the 
purchaser  to  come  to  a  decision.  The  salesperson  can 
perform  a  real  service  by  helping  buyers  to  plan  their 
purchases  and  finally  come  to  a  decision.    Generally,  when 


188 


Retail  Store  Management 


a  customer  has  come  to  a  decision,  no  more  goods  should 
be  shown.  The  skillful  elimination  of  certain  pieces  that 
were  brought  out  tends  to  focus  attention  on  fewer  pieces 
and  makes  a  decision  easier.  Closing  phrases  should  be 
studied:  "We  usually  sell  so  many  yards  of  this  goods 
for  such  a  garment,"  is  better  for  prompting  a  decision 
than  "Will  you  take  this?"  The  former  does  not  invite 
a  negative  answer.  "Take  this,  and  if  you  don't  like  it 
bring  it  back"  may  be  used  as  a  final  appeal.  All  such 
phrases  should  be  reenforced  with  appropriate  action  on 
the  part  of  the  salesperson. 

Courtesy  after  the  sale  is  as  important  as  before  the 
sale  because  of  the  goodwill  which  it  creates.  Remember 
that  profits  come  from  satisfied  customers  w^ho  come  back 
and  who  talk  well  of  the  store.  Thoughtful  attention 
along  the  lines  here  suggested  is  a  part  of  good  store 
management. 

A  knowledge  of  practical  sociology  is  likewise  impor- 
tant to  the  salesperson  and  may  be  most  effectively  used 
when  definitely  taught  to  salespeople.  For  example, 
fashion  in  all  its  phases  is  a  social  matter  and  can  be 
explained  only  by  sociology.  The  effects  upon  desire  for 
and  use  of  merchandise  due  to  religion,  politics,  nation- 
ality, social  connections,  recreation,  family  relationships, 
and  differences  in  age  and  occupation  are  generally 
understood  but  far  from  fully  analyzed  for  purposes  of 
scientific  retail  selling. 

What  is  here  offered  is  merely  suggestive  and  by  no 
means  exhausts  the  main  subjects  of  study  of  the  field 
in  w^hich  the  retail  salesperson  works.  With  a  practical 
knowledge  of  even  the  elements  of  psycholo.gy  and  sod- 
ology,  coupled  with  a  knowledge  of  the  merchandise,  the 
salesman  will  l>e  in  a  position  to  render  sei-vices  to  his 
customers  of  a  professional  grade,  and  fully  as  important 


Education  for  Salespeople  189 

and  valuable  as  the  services  of  the  teacher,  the  lawyer, 
or  the  doctor. 

Cooperation  between  Stores  and  Public  Schools 

As  already  indicated,  a  few  beginnings  have  been  made 
in  teaching  salesmanship  and  allied  subjects  to  retail 
store  employees.  In  most  cases,  classes  have  been  formed 
within  stores  under  the  direction  of  the  stores,  and  the 
instruction  given  by  employees  of  the  stores.  There  are 
also  beginnings  of  a  different  character.  Possibly  a  dozen 
high  schools  throughout  the  country  have  estabhshed 
courses  in  salesmanship  offered  usually  as  electives,  to 
which  certain  students  are  admitted  upon  their  own 
request  and  under  certain  conditions.  The  public  night 
school  systems  in  a  few  cities  offer  special  courses  for 
retail  salespeople.  Here  and  there  a  business  college  has 
added  a  course  on  selling.  A  limited  number  of  uni- 
versities offer  general  courses  in  salesmanship  whicli 
might  be  considered  as  having  something  in  them  of 
^'alue  to  retail  selling,  and  in  the  extension  work  of 
a  few  middle  west  universities,  specific  courses  on  retail 
selling  are  provided  either  by  the  correspondence  study 
or  by  the  class  method,  the  instruction  in  the  latter  case 
being  supplied  by  itinerant  university  extension  teachers, 
who  spend  a  day  per  week,  or  every  two  weeks,  in  each 
town  containing  a  class,  the  class  meeting  usually  being 
held  in  the  ev^ening. 

Beginnings  in  education  for  retailing  have  thus  been 
made  both  in  stores  and  in  educ^itional  institutions.  Up 
to  this  time,  no  attempt  has  been  made  to  mark  the  pos- 
sible limits  of  efficiency  of  either  type.  As  a  matter  of 
fact  neither  has  progressjod  far,  although  botli  have  laid 
claim  to  the  whole  field. 

It  seems  likely  that,  ere  long,  the  particular  merits  of 


190  Retail  Store  Management 

instruction  of  both  types  will  be  recognized  and  that  this 
recognition  will  be  followed  by  a  division  of  the  labor. 
As  a  matter  of  fact,  certain  kinds  of  instruction  can  be 
much  more  effectively  and  economically  administered  by 
schools  than  by  stores,  while  other  kinds  of  instruction 
must  be  given  in  the  stores.  It  is  folly  for  either  to 
attempt  to  supply  all  the  retail  employee  needs.  The 
system  of  education  for  retailing  in  the  future  will  include 
both  store  and  school,  each  doing  for  the  learner  that 
which  it  is  best  fitted  to  do. 

For  example,  instruction  concerning  merchandise  in  a 
general  way,  its  sources,  methods  of  production,  and  gen- 
eral qualities  may  best  be  learned  in  a  class  at  school,  but 
the  knowledge  required  about  a  particular  pair  of  hose, 
a  particular  hammer,  or  a  particular  coat  needs  to  be 
gained  in  the  store  through  the  store's  educational  meth- 
ods to  be  described  later  on. 

Education  the  Schools  Can  Best  Give 

Knowledge  about  psychology  and  sociology,  even  of 
the  most  practical  type,  can  be  best  taught  in  schools 
when  teachers  who  know  how  to  teach  these  subjects  shall 
have  been  procured,  but  the  study  of  individual  cus- 
tomers must  go  on  unceasingly  in  the  stores. 

If  all  stores  were  similarly  organized,  store  system 
might  well  be  taught  in  school,  but,  unfortunately,  store 
systems  differ  widely.  Only  the  general  outlines  can  be 
presented  in  school;  particular  stores  will  demand  par- 
ticular explanation  of  their  systems  to  new  employees. 

The  store  has  a  right  to  expect  of  the  schools  young 
people  who  know  how  to  read,  write,  and  spell,  and  who 
can  perform  the  ordinary  computations  of  business  arith- 
metic without  difficulty.  That  some  stores  now  hold 
classes  in  these  subjects  is  a  grave  reflection  upon  the 


Education  for  Salespeople  191 

weakness  of  the  school  systems,  a  weakness  that  can  and 
should  be  remedied. 

The  store  will  expect  that  its  school  trained  employees 
in  the  future  shall  have  a  good  general  knowledge  of 
commercial  geography,  of  the  origins  and  general  out- 
lines of  the  production  of  the  principal  lines  of  good  mer- 
chandise needed  to  supply  the  human  wants — food,  cloth- 
ing, and  shelter — and  a  more  specific  and  thorough  knowl- 
edge of  at  least  one  line  as  comprehended  under  such  a 
general  heading  as  textiles,  groceries,  paints  and  var- 
nishes, furs,  jewelry,  house  furnishings,  furniture,  etc. 

It  will  expect  that  the  graduate  of  the  retailing  courses 
in  schools  will  know  that  goods  must  be  demonstrated  in 
order  that  they  may  be  sold,  that  the  manner  in  which  the 
demonstration  is  made  is  almost  as  important  as  the 
merchandise  itself,  and  that  he  must  strive  continually 
to  get  the  customej*'s  point  of  view,  that  he  must  meet  the 
customer  from  that  point  of  view. 

Education  the  Stores  Can  Best  Handle 

The  store's  educational  system  will  seek  to  provide  the 
employee  with  an  intimate  knowledge  of  its  store  system, 
with  specific  knowledge  about  particular  merchandise, 
and  with  seasonable  educational  helps  intended  to  keep 
the  employee  up-to-date  and  progressive  in  his  methods. 

The  class  and  study  metliod  is  preeminently  the  method 
for  the  school.  It  is  always  difficult  to  run  classes  in  a 
store.  Working  time  is  consumed  and  routine  work 
disarranged.  In  the  future,  as  education  for  retailing 
(h^velops  within  schools,  and  as  stores  will  come  more 
and  more  to  depend  upon  school  for  trained  helj),  the 
store  class  plan  is  likely  to  bo  used  less  and  less.  Meet- 
ings of  salespeople  will  be  held,  perhaps  more  frequently 
than  at  present,  but  these  will  be  for  pnr])oses  of  ecu- 


ld'2  Retail  Store  Management 

fereiice  rather  than  for  study.  Lectures  will  be  given  to 
salespeople  in  groups.  General  instructions  will  be  given 
out  in  such  meetings,  perhaps,  but  the  continuously  meet- 
ing store  class  will  be  found  unnecessary. 

Stoee  Studies 

Store  educational  methods  that  are  likely  to  be  used 
extensively  in  the  future  and  which  might  profitably  be 
more  widely  used  at  present  include : 

1.  Encouraging  employees  to  read  the  trade  literature, 
technical  books,  and  trade  papers. 

2.  Encouraging  employees  to  study  the  literature 
issued  by  an  increasing  number  of  manufacturers  on  what 
the  salesman  should  know  about  the  goods  and  the  meth- 
ods of  selling  them. 

3.  Encouraging  employees  to  attend  public  night 
schools. 

4.  Encouraging  or  aiding  employees  to  subscribe  for 
correspondence  courses  specifically  intended  for  store 
employees. 

5.  Providing  for  educational  trips  of  groups  of  store 
employees  to  factories,  to  wholesale  houses,  or  other 
sources  of  supply,  and  through  retail  stores. 

6.  Announcing  information  to  employees  by  means  of 
bulletin  boards. 

7.  Publishing  a  house  organ  or  employee's  periodical. 

8.  Issuing  efficiency  bulletins  dealing  with  specific  prob- 
lems and  methods  of  meeting  them. 

9.  Keeping  records  of  errors  of  employees  and  using 
''blunder  slips." 

10.  Keeping  efficiency  records  of  employees  and  work- 
ing with  them  to  raise  the  efficiency. 

11.  Department  conferences  between  department  man- 
agers and  their  assistants. 


Education  for  Salespeople  193 

The  trade  paper  is,  or  should  be,  to  the  retail  salesman 
what  the  professional  journals  are  to  the  physician  or 
attorney,  a  constant  source  of  information  and  the  only 
means  of  keeping  up  to  the  minute  on  the  progress  of  the 
merchandise  world.  The  quality  of  both  books  and  papers 
dealing  with  retailing  is  constantly  improving.  A  retail 
salesman  can  no  longer  excuse  himself  from  reading  this 
material  on  the  ground  that  it  contains  nothing  worth 
while.  Every  retail  salesman  should  religiously  read  at 
least  one  good  trade  paper  regularly,  and  the  time  will 
come  when  the  salesman  who  has  never  read  a  book  on 
business  or  selling  will  find  himself  as  lonesome  as  the 
last  individual  of  a  lost  race. 

A  few  manufacturers  have  begun  to  issue  sales  man- 
uals, correspondence  courses,  and  other  material  of  high 
grade  and  of  splendid  value  to  the  salesman  who  happens 
to  sell  the  manufacturers'  goods.  The  number  of  manu- 
facturers getting  out  such  material  is  increasing,  and  this 
is  a  form  of  cooperation  that  should  not  be  overlooked. 
The  author  has  found  in  his  own  experience  that  it  is  well 
worth  while  to  write  to  manufacturers  of  almost  every 
kind  of  goods  for  sales  information  concerning  their 
goods.  The  information,  as  a  rule,  is  not  only  cheerfully 
given  but  is  exceedingly  appropriate  and  practical.  The 
manufacturer  realizes  that  his  goods  need  good  sales  pres- 
entation in  order  to  succeed  in  the  markets,  and  is,  there- 
fore, willing  to  help  salespeople  who  want  to  help 
themselves  to  a  better  sales  ability. 

Good  judgment  should  be  used  in  deciding  how  far 
salespersons  sliould  Ix;  encouraged  to  take  night  school 
work  or  correspondence  courses.  Within  reason  when  a 
strong,  healthy,  bright  salesman  or  salesgirl  is  concerned, 
some  encouragement  should  be  extended.  Such  a  course 
is  often  the  beginning  point  in  making  a  successful  busi- 


194  Befail  Store  Mmmgement 

ness  career.  The  employee  who  takes  and  finishes  such 
outside  courses  while  doing  his  reg'ular  daily  work  has 
given  evidence  of  possessing  grit  and  ambition.  Such  a 
person  may  often  be  entrusted  with  larger  responsibilities 
in  the  business. 

Educational  Trips 

To  gain  a  knowledge  of  how  things  are  made  a  trip  to 
the  factory,  noting  every  process  from  raw  material  to  fin- 
ished product,  is  the  best  plan.  To  one  who  has  never  seen 
the  inside  of  a  factory  it  is  very  difficult,  if  not  impossible, 
to  realize  or  understand  even  the  most  clearly  written 
account  of  how  a  thing  is  made.  The  visit  to  any  kind  of 
factory  is  better  than  none  at  all,  even  if  the  lines  manu- 
factured are  not  those  sold  in  the  store  by  the  salesman. 
One  may  at  least  gain  an  idea  of  the  division  of  the  plan 
that  must  precede  all  production  and  of  the  care  that 
must  be  exercised  to  get  out  standard  products. 

In  textiles  many  of  the  processes  of  manufacture  are 
very  similar  for  the  various  fibers.  Though  differing  in 
detail,  spinning  and  weaving  is  the  same  in  principle,  and 
the  principle  of  the  loom  can  well  be  obtained  bj^  watching 
the  weaving  of  a  rag  carpet  if  no  other  type  of  textile  mill 
is  at  hand. 

In  taking  a  group  of  salespeople  through  a  factory, 
considerable  precaution  should  be  taken  to  warn  them  of 
danger  from  coming  too  near  moving  machinery.  The 
group  should  be  kept  small  enough  so  as  to  make  it  pos- 
sible for  the  leader  to  talk  to  and  be  understood  by  all 
even  when  surrounded  by  whizzing  machines.  Probably 
ten  persons  is  as  many  as  can  be  taken  through  any  fac- 
tory advantageously  by  one  guide  or  leader.  Each  sales- 
man should  have  a  notebook  and  pencil  when  taking  such 
a  trip  and  should  jot  down  the  names  of  the  processes 


Education  for  Salespeople  195 

when  seen,  tlie  names  of  machines  if  of  any  importance, 
and  such  other  facts  as  may  be  given  on  the  trip. 

Visits  to  sources  of  supply  can  be  made  immensely 
valuable  to  salespeople  if  their  attention  is  called  to  the 
points  about  merchandise  and  the  ways  of  handling  it 
that  should  be  observed.  There  is  far  too  little  oppor- 
tunity given  to  salespeople  to  avail  themselves  of  this 
method  of  education. 

Another  form  of  educational  trip  is  to  visit  other 
retail  stores  to  note  what  goods  tliej^  have  on  display, 
how  they  display  them,  and  how  they  sell  them.  Still 
another  form  of  trip  of  value,  particularly  in  large  stores, 
is  the  trip  through  one 's  own  store  to  see  where  merchan- 
dise is  located,  how  it  is  displayed,  to  note  its  quality  and 
quantity  so  that  suggestions  can  be  made  to  customers, 
and,  incidentally,  to  increase  the  sales  of  the  store  to  its 
own  employees. 

The  Use  of  Bulletin  Boards 

The  bulletin  board  is  now  in  common  use  in  most  stores, 
particularly  as  a  means  of  making  announcements;  but 
it  also  has  educational  possibilities.  Some  concerns  have 
found  it  profitable  to  post  samples  of  merchandise  and 
of  raw  materials,  together  with  a  brief  typewritten  story 
about  the  merchandise,  on  the  bulletin  board  to  the  effect 
that  all  salespeople  in  the  store  become  acquainted  with 
the  article  in  question.  An  eastern  concern  advertises  a 
weekly  service  to  be  used  on  the  bulletin  board  as  an  edu- 
cational method.  Tlic  weekly  service  consists  of  samples 
of  merchandise,  a  story  of  how  it  is  made,  illustrations  of 
good  and  bad  salesmanship,  etc.  The  bulletin  board  can 
also  be  used  effectively  by  posling  brief,  pitliy  sah'S  hints, 
suggestions  oji  how  to  increase  sales,  and  store  news;  in 
fact,  tlio  ingenious  manager  will  fiud  a  great  variety  oi 
uncatalogable  uses  for  a  bulletin  board. 


196  Refail  Store  Management 

The  Use  of  House  Organs 

The  house  organ  is  a  method  possible  only  in  the  large 
store  employing  many  employees.  The  purpose  of  the 
iiouse  orgjuQ  is  not  always  purely  educational,  but  this 
side  can  often  be  developed  with  profit.  Since  the  house 
organ  is  to  be  read  by  the  employees  at  their  leisure,  it 
nmst  contain  material  of  interest.  Anything  of  a 
"preachy"  nature  is  likely  to  be  passed  by.  Therefore, 
educational  matter  in  a  house  organ  needs  to  be  presented 
in  as  interesting  a  manner  as  possible.  Sales  principles 
illustrated  by  pictures  or  presented  in  story  form  have 
been  found  effective. 

Mottoes  and  maxims  are  helpful.  Sketches  of  how  diffi- 
cult sales  were  made,  methods  used  by  most  successful 
salespeople,  and  other  personal  matter  when  judiciously 
used  have  been  found  serviceable  from  an  educational 
standpoint. 

The  efficiency  bulletin  in  the  form  of  a  typewritten  or 
mimeographed  letter  from  the  manager  of  the  store  or 
the  superintendent  of  salesmen  has  been  used  effectively 
in  a  few  stores.  In  these  bulletins  subjects  of  timely  inter- 
est are  presented,  some  dealing  wath  salesmanship,  others 
with  store  service,  others  with  cooperation  of  depart- 
ments, etc.  Presentation  in  the  form  of  an  account  of  an 
actual  incident  in  the  store  and  at  the  close  a  challenge  to 
the  salesperson  reading  the  bulletin  to  state  what  he  or 
she  would  have  done  in  a  similar  case  is  an  excellent  plan. 
Usually  the  recipient  of  the  bulletin  is  required  to  sign 
it  after  reading  and  then  to  return  or  hand  it  to  some 
other  designated  person.  The  department  manager  is 
usually  required  to  keep  track  of  the  effect,  if  any,  of  the 
reading  of  the  bulletin  and  to  report  to  the  manager  or 
superintendent  of  the  store. 


Education  for  Salespeople  197 


< 

BLUNDER  SLIP 

SALES  NO. RATE 

TiMF  nn 

- 

Error 

1 

Discourtesy  to  customer 

2 

Lateness 

3 

Wrong  address 

4 

Incorrect  extension 

5 

Omitting  no.  on  sales  check 

6 

Leaving  locker  open 

7 

Failure,  to  stamp  time  card 

8 

Failure  to  enter  time  on  dept.  sheet 

9 

Failure  to  enter  no.  or  amt.  on  transfer  card 

10 

I  acknowledge  being  the  cause  of  the  above  error. 

Signed                               _ 

Approved 

r"i<;.   L't'i.    -I'ImiiIrr  Slip 


198  Retail  Store  Management 

Blunder  Slips 

One  of  the  best  methods  of  improvmg  the  efficiency  of 
store  workers  is  by  keeping  an  account  for  every  em- 
ployee of  all  errors  or  blunders  made.  The  usual  pro- 
cedure of  bringing  the  error  to  the  attention  of  the 
employee  is  by  means  of  the  '' blunder  slip."    Figure  26 


BLUNDER  SLIP 

NO. 

DEPT. 

DATE                               REPORTED 

BY 

Name 

Description  of  error 

Your  signature 
to  repeat  this  blunder. 

means  that  you  will  be  very  careful  not 

Signature 

Fig.  27. — Unclassified  Blunder  Slip 

is  a  model  of  the  blunder  slip  used  in  one  store :  Another 
form  which  does  not  attempt  to  classify  the  blunders,  and 
must  be  filled  in  in  writing  is  given  in  Figure  27. 

The  blunder  slips  are  collected  daily  and  sent  to  the 
educational  director,  who  in  turn  sends  them  to  the  sales- 
people who  have  made  the  blunders.    Upon  receiving  the 


Education  for  Salespeople  199 

slip,  the  salesperson  makes  any  explanation  that  may  be 
called  for  and  then  signs  his  or  her  name  and  returns 
to  the  educational  director.  If  the  blunder  is  a  serious 
one,  or  if  the  same  blunders  occur  twice  during  the  same 
month,  the  salesperson  is  called  to  the  office  for  con- 
ference with  the  director.  In  this  case  pains  are  taken 
to  make  the  salesperson  see  the  gravity  of  the  blunder 
and  the  way  to  avoid  its  recurrence. 

At  least  once  a  month  the  buyer  of  each  department 
should  receive  a  report  from  the  director  of  education 
showing  the  number  of  blunders  reported  from  his  depart- 
ment, the  number  of  these  reported  by  himself,  and  the 
relative  rate  of  increase  or  decrease  in  blunders  within 
the  department. 

It  is  never  vnse  to  use  a  fine  system  as  a  disciplinary 
measure  for  errors  committed,  certainly  not  in  retail 
stores ;  but  the  record  of  blunders  made  will  certainly  be 
found  helpful  to  the  employment  manager  when  time  for 
promotions  or  changes  to  other  departments  comes. 

Efficiency  Records 

The  efficiency  record  of  the  employee,  when  properly 
kept,  is  another  most  valuable  method  of  stimulating 
progress.  This  record  should  be  kept  by  the  superin- 
tendent of  employees  and  should  be  filed  wnth  the  *' Anal- 
ysis of  Position,"  outlined  in  a  preceding  chapter,  the 
employee's  application  blank,  testimonials  from  former 
employers  and  others,  and  written  judgments  of  the 
department  manager  and  floor  manager  obtained  at  least 
once  a  yc^ar,  to  wliicli  the  superintendent,  after  careful 
study,  adds  his  own.  The  form  of  the  statistieal  record 
of  the  efficiency  of  the  employee,  in  this  case  a  salesper- 
son, is  given  in  Figure  28.  This  form  may  be  modified  to! 
suit  special  conditions  and  situations. 


200 


Retail  Store  Management 


EFFICIENCY  RECORS>  OF  SALES   PERSON 

Name _       _  No Date  entered  store 

k 

At>p  vuh^n  entered   ^            ^  Nationality    ^            H^^rpp  conditions 

PrpvlniK  pvp«^ri<^nr«> ..,, 

Jan. 

'Feb. 

Mar 

Apr. 

May 

June 

July 

Aug. 

Sept 

Oct. 

Nov. 

Dec. 

Total  sales 

Per  cent  sales 

Section  per  cent 

Per  cent  returns 

Errors 

Times    late 

Days  absent 

Deportment 

Wage 

,. 

Fig.  28. — Eflicioncy  Record  of  Salesperson 

Dep.vetmental  Conferences 

When  the  final  efficiency  record  is  made  up,  confer- 
ences may  be  held  with  each  individual  salesperson  fall- 
ing below  standard  in  any  respect,  the  reasons  for  the 
weakness  determined,  and  steps  taken  to  strengthen  this 
particular. 

For  example,  if  the  ratio  of  wage  to  sales  is  too  high, 


Education  for  Salespeople  201 

the  causes  can  be  determined  by  reference  to  the  judg- 
ments of  the  salesperson's  superiors.  If  it  be  found  that 
the  weakness  is  lack  of  knowledge  of  goods  or  poor  care 
of  stock  or  any  other  one  or  two  particulars,  the  sales- 
person can  be  called  in  conference  and  the  situation  out- 
lined fully  and  definitely.  Not  only  can  the  weakness 
be  pointed  out,  but  also  suggestions  can  be  given  on  just 
what  needs  to  be  done  to  eradicate  the  weakness. 

Conferences,  then,  with  the  department  manager  and 
the  superintendent  can  be  made  a  most  effective  means 
of  increasing  sales  efficiency  if  based  upon  definite  rec- 
ords fully  understood  by  both  salesperson  and  superior. 
If  native  ability  and  a  fair  education  for  retailing  as 
outlined  are  assumed,  the  chief  educational  work  of  the 
store  will  be  one  of  developing  individual  efficiency  by 
means  of  conferences,  using  efficiency  records  as  the 
basis  for  discussion  and  as  guides  to  better  results. 

In  other  words,  information  and  facts  are  to  be  insisted 
upon  as  the  basic  conditions  of  successful  conferences. 
When  tempered  with  tact  and  understanding,  these  meth- 
ods are  constructive  and  tend  to  promote  employees' 
goodwill  as  well  as  respect. 

Rating  S.vlespeople 

For  the  purpose  of  checking  the  work  of  the  educa- 
tional d<'partment,  each  salesperson  should  be  periodi- 
cally rated  to  see  if  improvement  is  being  made.  The 
rating  sheet  should  be  carefully  drawn  up  and  should  be 
made  out  in  triplicate.  One  copy  should  go  to  the  buyer, 
one  to  the  floor  manager,  and  one  should  be  kept  by  the 
educational  director.  On  these  rating  sheets,  each  of 
these  individuals  shonld  express  nnder  each  point  named 
his  best  judgment  regarding  the  salesperson.  Figure  29 
will  give  an  idea  of  surh  ;i  lating  sheet.  Its  relation  to 
the  previous  analysis  of  position  will  be  obvious. 


202 


Retail  Store  Management 


Rating  of  Salesperson 


Department Position . 


Name  of  salesperson. 


Williugness  to  work 

Good  sense 

Honesty 

Health 

Personal  appearance 

Punctuality 

Obedience 

Alert 

Patient 

Cheerful 

Ambitious 

Tactful 

Courteous 

Pleasing  personality 

Merchandise  taste 

Knowledge  of  merchandise 

Care  of  stock 

Ability  to  handle  customers 

Proper  approach 

Methods  of  showing  goods 

Closing  sales 

Suggestive  selling 

Service  to  customers 
Interest  in  work 
Growth  and  leadership  in  position 


Fig.  29. — Rating  Sheet  for  Salesperson 


Education  for  Salespeople  203 

TEST  QUESTIONS 

1.  Enumerate  the  chief  factors  which  caused  the  apprentice- 
ship system  to  break  down  in  retail  stores. 

2.  Explain  why  ''the  route  to  success  to-day  is  not  through 
experience  alone,  but  through  experience  and  schooling." 

3.  In  what  ways  can  the  manager  or  department  head  give 
instructions?    What  limitations  are  there? 

4.  What  technical  instruction  is  feasible  in  regard  to  the 
routine  work  of  an  employee  ?    How  should  it  be  given  ? 

5.  In  what  common  school  branches  should  proficiency  be 
expected  in  a  store  salesperson  ? 

6.  What  knowledge  should  a  salesperson  possess  of  the  goods 
which  he  or  she  handles? 

7.  What   minimum  knowledge  of  the   simple  principles   of 
psychology  should  a  salesperson  possess? 

8.  Indicate  the  most  essential  facts  about  effective  salesman- 
ship that  might  be  taught  to  salespersons. 

9.  Wliat  education  required  for  effective  retail  store  work  can 
the  schools  best  give? 

10.  What  matters  can  best  be  given  in  the  store  1 

11.  Enumerate  at  least  ten  practical  methods  or  devices  that 
aid  in  store  educational  work. 

12.  What  information  should  be  given  in  a  summarized  rating 
sheet  of  a  salesperson  ? 


CHAPTER  XVI 

AVELFARE    W^ORK 

In  a  former  chapter  the  relation  of  welfare  work  to  the 
emploj^mcnt  and  education  of  employees  was  indicated. 
All  are  functions  of  the  division  which  should  be  created 
in  every  large  store  and  which  should  be  under  the  direc- 
tion of  an  official  that  has  been  called  in  this  book  the 
' '  superintendent  of  employees. ' '  It  now  remains  to  make 
clear  just  what  is  meant  by  the  term  * 'welfare  work"  and 
to  point  out  briefly  some  of  the  more  important  things 
which  it  should  accomplish. 

Purpose  of  Welfare  Work 

Welfare  work  concerns  itself  with  the  welfare,  in  the 
broadest  sense,  of  the  employees  of  the  concern.  The 
welfare  work  department  must  look  after  the  health  and 
comfort  of  the  individual  workers  to  the  end  that  they 
may  not  only  do  their  work  well  but  also  that  they  take 
pleasure  in  their  work  and  enjoy  their  connection  with 
the  concern. 

It  may  be  pointed  out  at  the  outset  that  it  may  be 
impossible  for  any  person,  department,  or  institution 
to  make  every  employee  happy  and  contented  with  his 
work;  but  it  is,  neverth/oless,  true  that  most  human  beings 
win  reepond  to  human  treatment  and  will  appreciate  to 
some  extent  what  is  done  for  them  in  order  to  make  them 
comfortable.     It  is  the  business  of  the  welfare  depart- 

204 


Welfare  Work  205 

ment  to  provide  the  conditions  as  fully  as  possible  con- 
tributing to  the  employee's  welfare.  The  final  acceptance 
or  rejection  must,  of  course,  come  from  the  employee. 

Emplo3^ers  expect  their  employees  to  take  an  interest 
in  their  concerns.  Why,  then,  as  someone  has  asked, 
should  not  the  employer  take  personal  interest  in  his 
employees?  Surely-,  broadminded,  sensible,  humane  em- 
ployers have  always  done  this,  especially  in  small  busi- 
nesses where  it  was  possible  for  them  to  know  their 
employees  personally.  But  during  the  last  half  century, 
the  period  in  which  large  stores  have  come  into  existence, 
employers  have  been  separated  farther  and  farther  from 
the  rank  and  file  of  their  employees.  As  a  consequence 
the  personal  regard  for  employees  as  individual  human 
beings  has  in  many  cases  become  less  sympathetic  and 
more  formal.  Mechanical  system  has  too  frequently 
taken  the  place  of  intimate  human  understanding.  In 
consequence  the  employees  have  done  less  well  in  the 
work  and  have  made  less  of  their  own  abilities.  Intro- 
duction of  large  scale  business  has  resulted  in  many  gains 
in  efficiency,  but  in  the  handling  of  men  and  women  the 
most  frequent  result  has  been  a  decrease  in  efficiency. 

It  is  only  within  the  last  score  of  years  that  the  need 
for  systematic  welfare  work  has  come  to  be  recognized 
in  any  general  way.  Considering  all  classes  of  indus- 
tries, probably  a  thousand  carried  on  some  welfare  work, 
specializefl  as  such,  in  1905.  In  1915  not  less  than  30,000 
corporations  wore  doing  something  along  these  lines. 

Not  onlv  has  the  number  of  concerns  carrving  on  wel- 
fare  work  greatly  incronsed,  but  the  kinds  of  work  done 
have  increa.sod  in  \Tonderful  variet>\  The  end  of  the 
things  that  can  b©  done  for  employees  with  profit  seems 
not  yet  to  be  in  sight.  In  no  single  institution  can  one 
find  a  complete  operation  of  wolfare  work  as  devploped 


206  Retail  Store  Management 

in  all  its  phases.  On  the  contrary,  one  finds  some  one 
phase  developed  in  one  place,  another  phase  in  another 
store,  and  so  on;  with  almost  entire  lack  of  parallel 
among  them.  This  may  be  accounted  for  partly  by  the 
fact  that  the  subject  has  never  been  presented  in  an 
exhaustive  way  so  that  the  results  could  be  used  by  the 
general  store  public.  Moreover,  welfare  work  costs 
money.  The  results  are  not  immediate;  consequently 
store  managers  have  felt  compelled  to  limit  this  kind  of 
work  to  the  more  pressing  problems.  Since  these  prob- 
lems differ  from  store  to  store,  the  welfare  work  has 
varied  from  store  to  store. 

Suitable  Working  Conditions 

The  most  fundamental  work  of  the  welfare  department, 
in  the  writer's  opinion,  is  to  provide  suitable  working 
conditions.  A  store  like  any  other  working  place,  should 
be  properly  lighted,  ventilated,  heated,  and  cleaned.  As 
a  matter  of  fact,  very  few  welfare  departments,  as  estab- 
lished in  retail  stores  to-day,  have  anything  to  do  with 
these  matters.  The  duties  attendant  upon  getting  these 
right  conditions  are  in  most  cases  attended  to  by  other 
departments,  general!}^  under  the  store  superintendent. 
The  welfare  department  has  very  little  to  say  about  how 
the  store  should  be  lighted,  heated,  and  ventilated  for  the 
reason  that  the  lighting,  heating,  and  ventilating  systems 
were  installed  with  the  building  of  the  store  years  before 
a  welfare  department  was  even  thought  of.  Whether 
these  matters  come  under  the  direction  of  the  welfare 
department  or  not,  it  is  clear  that  the  work  is  closely 
allied  to  the  aims  of  welfare  work,  and  the  welfare  depart- 
ment should  be  given  at  least  some  supervisory  powers 
in  this  connection  sufficient  to  bring  these  particulars  up 
to  well-recognized  standards. 

Let  us  outline  some  of  these  standards  briedy. 


Welfare  Work  207 

Store  Lighting 

The  store  that  is  well  lighted  permits  of  the  best  sales- 
manship and  therefore  pays  for  itself  without  consider- 
ing the  welfare  of  the  salespeople.  Goods  may  be  shown 
to  their  best  advantage,  errors  may  be  largely  eliminated 
both  in  clerical  work  and  in  the  selection  of  the  right 
goods,  shades,  finishes,  etc.  But  good  lighting  has  its 
interests  for  the  welfare  department.  People  are  always 
happier  when  working  in  a  well-lighted  room  than  when 
working  in  badly  lighted  places.  Poor  hghting  results 
in  eyestrain,  nervous  fatigue,  and  depression.  People 
who  work  in  poorlj^  lighted  rooms,  rooms  with  either  too 
much  or  too  little  light,  suffer  from  inflamed  eye,  imper- 
fect color  vision,  and  in  some  cases  from  more  serious 
eye  defects. 

It  is  somewhat  difficult  to  outline  standard  lighting. 
In  a  general  way,  it  should  not  be  too  bright  nor  too  weak ; 
there  should  be  no  glare;  it  should  be  steady;  it  should 
come  from  sources  that  will  not  cause  shadows  to  fall 
on  the  merchandise  shown  on  counters  or  show  cases. 
It  should  be  safe  from  danger  of  causing  fires,  and,  in  the 
interests  of  store  management,  should  be  as  economical 
as  possible.  In  intensity,  the  standard  for  store  work 
may  vary  somewhat  for  different  departments,  but  3-foot 
candles  may  be  accepted  a^  scientific.  Tliree-foot  candles 
mean  the  light  equivalent  to  tlie  intensity  of  light  obtained 
from  three  candles  of  a  certain  size  placed  a  foot  distant 
from  the  object  to  be  illumined.  For  ordinary  purposes, 
3-foot  candles  of  light  may  be  considered  as  the  amount 
of  light  that  will  permit  of  reading  fine  print  for  a  con- 
siderable length  of  time  without  any  feciling  of  eyestrain. 

Natural  lighting  is  for  all  purposes  in  store  work  tlie 
best.    It  has  a  healthful  effect,  is  pleasant  to  the  eye,  and 


208  Bdail  Store  Management 

disinfects  by  killing  germ  life.  Natural  light  tlirongh 
windows  and  skylights  should  be  utilized  to  the  fullest 
extent,  but  in  a  great  number  of  large  stores  it  is  utterly 
out  of  the  question  to  get  the  required  amount  of  natural 
light  diffused  throughout  all  the  rooms  of  the  store. 
Artificial  light  should  be  selected  that  will  give  the 
appearance  of  natural  light  as  closely  as  possible.  Except 
in  small  stores  in  country  districts  where  kerosene  is  still 
used,  the  most  common  forms  of  lighting  now  are  elec- 
tricity, illuminating  gas,  and  acetylene  gas.  Electricity 
has  decided  advantages  over  the  others  wherever  it  is 
available. 

To  secure  the  standard  requirements  of  softness,  stead- 
iness, freedom  from  shadows,  and  economy,  electric  lights 
can  be  installed  almost  with  mathematical  precision.  The 
sharp  glare  of  the  tungsten  is  softened  by  means  of  indi- 
rect or  semi-indirect  fixtures.  The  lights  are  distributed 
so  as  to  equalize  the  illumination  in  all  directions,  flooding 
the  salesrooms,  as  it  were,  with  a  soft  pleasant  light. 

Store  Ventilation 

Ventilation  needs  careful  consideration  from  the  wel- 
fare department  that  seeks  to  perform  its  full  function. 
Bad  air  is  far  more  injurious  to  store  employees  than 
most  people  know.  Bad  air  produces  fatigue  and  sleep- 
iness. Persons  who  stay  in  rooms  poorly  ventilated 
suffer  from  headaches  and  nervousness,  and,  notably, 
catch  colds  easily. 

Not  only  do  the  salespeople  suffer  from  bad  store  air, 
but  also  the  customers.  Shoppers  who  find  themselves 
all  tired  out,  nervous,  patience  gone,  and  ill  at  ease  are 
often  suffering  from  the  effects  of  the  bad  air  breathed 
in  the  store. 

There  is  no  question  but  that  the  poorly  ventilated 


Welfare  Work  209 

store  reduces  the  efficiency  of  tlie  salespeople,  and  there- 
fore the  sales  of  the  store. 

Every  adult  in  the  store,  customers  as  well  as  em- 
ployees, needs  from  40  to  50  cubic  feet  of  fresh  air  per 
minute,  or  3,000  cubic  feet  per  hour.  Children  need 
somewhat  less.  This  is  the  standard.  If  this  amount 
of  air  is  not  supplied  constantly,  the  result  is  bad  air  and 
its  consequences  are  as  enumerated  above. 

To  secure  this  amount  of  fresh  air  per  person  in  the 
store,  ventilating  devices  are  used.  Ordinary,  natural 
ventilation  through  doors  and  windows  can  serve  only  in 
the  smallest  stores.  One  of  the  simplest  devices  of  arti- 
ficial ventilation  is  the  electric  fan  that  keeps  the  air  in 
motion  and  in  so  doing  starts  air  currents  that  bring 
fresh  supplies  to  the  individuals  that  work  nearby.  The 
beneficial  effects  of  the  use  of  the  fan  are  too  obvious  to 
need  further  explanation. 

One  way  of  receiving  artificial  ventilation  on  a  general 
scale  is  secured  by  forcing  air  into  the  rooms  through 
pipes  or  ducts  by  means  of  a  fan  or  fans.  The  room  to 
be  ventilated  has  both  inlets  and  outlets  for  the  air,  and 
as  fresh  air  is  forced  into  tlie  room,  foul  air  is  crowded 
out  througli  the  outlets.  This  is  known  as  the  ''plenum 
system." 

In  some  cases  the  aii*  in  tlie  room  is  withdrawn  by 
suction  by  having  fans  placed  in  the  ducts  leading  out  of 
the  room  and  thus  drawing  the  air  away  from  the  room. 
Air  drawn  out  leaves  place  for  otlier  fresh  air  to  come 
in  through  flu'  inlet  ducts.  In  this  way  ciiculation  is 
provided.    This  is  calh'd  the  ''vacuum  system." 

In  the  large  buildings  both  vacuum  and  i)l<'num  sys- 
tems are  used.  That  is,  air  is  forced  into  tlie  1)uilding 
by  means  of  a  fan  system  and  likewise  drawn  out  by  fans. 
The  amount  of  air  needed  for  the  number  of  people  in  the 


210  Bctail  Store  Management 

store  is  regulated  by  the  size  of  the  ducts  leading  into 
and  out  of  the  store  and  by  the  speed  of  the  air  current. 
For  example,  a  room  which  at  the  most  crowded  period 
of  the  day  holds  a  hundred  people,  should  receive  about 
5,000  cubic  feet  of  air  per  minute.  If  the  air  ducts  have 
a  cross  sectional  area  of  9  square  feet,  the  current  will 
have  to  come  in  at  the  rate  of  556  feet  per  minute,  or 
about  9  feet  per  second. 

Store  Heating 

A  standard  temperature  should  also  be  aimed  at  in 
the  store.  Numerous  studies  have  been  made  showing 
that  the  best  work  can  be  done  when  the  temperature  is 
from  65  to  70  degrees,  Fahrenheit.  Beyond  these  limits 
the  workers  begin  to  lose  their  highest  ability.  Less  than 
65  is  likely  to  feel  too  chilly  to  be  comfortable,  and  more 
than  70  degrees  caused  the  salespeople  to  become 
fatigued  easily,  to  feel  sleepy,  and  to  lose  their  spright- 
liness. 

But  it  is  not  only  the  temperature  and  the  purity  of  the 
air  that  need  to  be  considered.  All  air  under  ordinary 
conditions  contains  some  moisture.  The  amount  of  mois- 
ture in  the  air  has  a  great  deal  to  do  with  its  effect  on 
the  human  being.  When  air  contains  only  10  per  cent  as 
much  moisture  as  it  could  hold,  it  would  be  termed  very 
' '  dry  air. "  At  a  temperature  of  65  or  70  degrees  air  with 
only  10  per  cent  of  moisture  would  prove  harmful  if  a 
person  continued  to  work  in  it  for  a  long  time.  Air  so 
dry  would  tend  to  evaporate  all  the  moisture  out  of  the 
skin  and  mucus  membranes  of  the  eyes,  nose,  and  throat. 
This  condition  would  tend  to  bring  on  such  disorders  as 
eczema,  inflamed  eyes,  catarrh,  and  sore  throat. 

On  the  other  hand  if  there  is  too  much  moisture  in  the 
air,  particularly  if  it  is  warm,  it  causes  the  perspiration 


Welfare  Work  211 

to  gather  and  clog  the  pores  of  tlie  skin  and  to  cause  the 
individual  to  tire  easily.  This  fatigue  is  due  to  poisons 
that  collect  in  the  body  and  that  are  ordinarily  carried 
off  in  the  perspiration  but  which  remain  in  the  body 
when  the  sweat  glands  are  clogged  by  the  moisture  exte- 
rior to  the  body. 

Thus  either  too  much  moisture  or  too  little  is  bad  for 
efficiency.  The  amount  of  moisture  in  the  air  is  measured 
by  the  percentage  method.  If  the  air  contains  half  of  the 
moisture  that  it  can  hold  at  a  certain  temperature,  we 
say  that  its  humidity  is  50.  If  it  contains  three-fourths 
as  much  water  as  it  can  hold  we  say  that  it  has  a  humidity 
of  75.  Experience  with  tests  in  retail  stores  and  other 
institutions  where  many  people  work  show  that  the  best 
work  can  be  done  when  the  humidity  ranges  from  50  to 
75,  averaging  around  65.  Various  forms  of  hygrometers 
are  available  for  measuring  the  humidity  of  air. 

One  reason  why  it  is  difficult  to  regulate  the  humidity 
of  a  store  or  any  otlier  place  artificially  heated  is  that  the 
air  can  hold  much  more  moisture  at  higher  temperatures 
than  at  lower.  Moist  air  at  50  degrees  becomes  dry  air 
at  80  degrees,  if  no  moisture  is  added  to  it  while  it  is 
being  heated.  Tlius  air  taken  into  the  building  from  out- 
doors on  a  cold  day  and  warmed  inside  over  steam  pipes 
or  otlier  heating  apparatus  clianges  from  high  to  low 
humidity.  Unless  water  is  added  to  it,  the  air  is  almost 
certain  to  be  too  dry  inside  during  tlie  cold  weather. 
Hence  various  systems  have  been  devised  to  add  moisture 
to  the  water  wliih;  it  is  being  heated,  as  for  example,  by 
letting  it  pass  over  pans  of  water  from  which  it  might 
evaporate  and  by  turning  currents  of  steam  or  of  water 
spray  into  the  current  of  air  moving  in  the  ducts.  What- 
ever the  method,  it  is  essential  that  tiic  humidity  be  made 
right  if  the  l)est  work  is  to  be  done  and  if  the  employees' 
health  and  efficiency  ho  k^pt  np  to  top  notch. 


'2^'2  Retail  Store  Management 

There  is  another  purpose  in  wasliing  the  air  with 
water.  Besides  humidifying  the  air,  excess  of  water  in 
the  spray  tends  to  wash  out  the  dust  particles  that  are 
so  plentiful  in  all  city  air.  Thus  the  air  is  made  more 
pure,  and  less  burden  is  placed  upon  the  breathing  organs 
in  getting  rid  of  dust  and  dirt. 

Store  Cleanliness 

The  standard  of  cleanliness  for  a  retail  store  should 
be  that  of  a  well-regulated,  modern  home.  A  store  cannot 
be  kept  too  clean.  In  these  days  of  increasing  public 
interest  in  hygiene  and  the  relation  of  dirt  to  disease  the 
store  which  leads  in  cleanliness  and  sanitation  is  certain 
to  profit  by  the  public  goodwill.  Floors,  windows,  w^alls, 
ceiling,  back  of  the  counter  as  w^ell  as  in  front,  merchan- 
dise, and  all  must  be  kept  free  from  dust,  tarnish,  and 
stain.  No  business  profits  so  directly  from  observing  the 
strictest  cleanliness  as  retailing,  the  business  that  stands 
closest  to  the  consumer.  Cleanliness  pays  both  directly 
and  indirectly. 

The  duster  should  be  used  as  little  as  possible  and  damp 
cloths  substituted  for  it.  The  duster  merely  stirs  up  the 
dust  which  later  settles  down  again.  The  damp  cloth 
gathers  the  dust,  and  when  the  cloth  becomes  very  much 
soiled,  it  may  be  laundered  clean  for  use  again. 

Sweeping  is  an  art  that  should  be  carefully  taught  to 
the  store  cleaners  in  order  that  the  dust  and  dirt  on  the 
floors  may  be  thoroughly  removed  and  not  merely  raised 
into  the  air. 

Drinking  Water 

Every  store  should  supply  good,  cool  drinking  water, 
easily  accessible  at  all  times  both  for  its  employees  and 
for  customers.     One  of  the  great  hygienic  mistakes  of 


Welfare  Work  213 

many  people  is  in  not  drinking  enough  water  and  in  drink- 
ing it  only  at  meal  times.  An  adult  should  drink  a  quart 
or  more  a  day,  and  most  of  this  should  be  consumed 
between  rather  than  at  meal  time.  So  far  as  retail  work- 
ers are  concerned,  very  few  drinli  as  much  water  as  they 
should,  and  the  fault  is  partly  the  employer's  who  fails 
to  provide  the  necessary  amount  in  convenient  places  for 
the  use  of  his  employees. 

Good  drinking  water  should  be  pure,  colorless,  and 
odorless.  It  should  be  cool,  but  should  not  be  ice  cold. 
In  fact  water  that  contains  ice  or  that  is  melted  from  ice 
is  quite  likely  to  be  impure,  since  freezing  does  not  kill 
most  germs  found  in  lake  or  pond  waters.  Water  that 
is  ice  cold  is  injurious  because  it  causes  the  stomach  to 
be  chilled,  and  this  is  likely  to  be  followed  by  blood  con- 
gestion. Ice  water  dulls  the  organs  of  taste  as  well. 
Tliose  who  drink  much  ice  water  are  likely  to  suffer  from 
indigestion  or  dyspepsia. 

The  best  way  to  supply  di'inking  water  is  by  moans  of 
drinking  or  bubbling  fountains  conveniently  located  about 
the  store,  accessible  to  both  salespeople  and  to  customers. 
Even  stores  Avithout  running  water  can  secure  apparatus 
that  will  provide  drinking  water  without  the  use  of  cups 
or  glasses. 

The  main  objection  to  the  cup  is  the  sanitary  one. 
Disease  is  conveyed  from  the  sick  to  the  well  by  means 
of  it.  Where  cups  must  be  used,  each  salesperson  should 
have  an  individual  cup,  m-,  bcttei-  still,  paper  cups  should 
be  at  hand  near  the  water  su[)i)ly  so  that  each  person 
seeking  a  drink  should  lia\e  a  new,  clean  cup. 

The  importance  of  good  di-inking  water  to  the  store 
efficiency  cannot  be  overenipliasized.  Some  stores  even 
send  VMcuum  l)ot<lf'S  of  cold  water  out  with  tlicii-  delivery 
men  during  hot  wenthe?-.    'i'he  mm  ;ire  thus  supplied  with 


214  Retail  Store  Management 

drink  at  all  times  ami  need  neither  thirst  nor  waste  any 
time  in  getting  water  while  on  the  trip.  It  has  been  said 
that  in  one  store  at  least,  the  measure  has  helped  to  keep 
the  delivery  men  out  of  the  saloons,  since  they  go  there 
otherwise,  solely  to  get  something  to  quench  their  thirst. 

Dressing  Rooms,  Toilets,  etc. 

The  dressing  rooms  of  the  employees  of  a  store  should 
be  clean,  light,  and  well  ventilated.  During  cold  weather 
they  should  be  heated  to  a  temperature  of  60  to  65  degrees 
at  least.  There  should  be  provided  an  individual  locker 
for  every  person,  large  enough  to  hold  outer  clothing  in 
good  order.  These  lockers  should  be  constructed  so  as  to 
permit  constant  ventilation.  Wet  or  damp  clothing  hung 
in  the  locker  should  have  a  chance  to  dry  thoroughly.  In 
some  stores  a  clothing  drying  room  is  provided  where 
the  clothing  is  hung  in  a  current  of  dry,  hot  air  which 
quickly  evaporates  all  the  moisture  in  the  garments. 

There  should  be  separate  toilets  for  the  sexes,  no  mat- 
ter what  the  size  of  the  store,  if  both  sexes  are  employed. 
There  is  no  excuse  for  anything  but  the  best  type  of  open 
plumbing  and  sanitary  fixtures.  The  closets  should  be 
provided  with  self-closing  doors  and  should  be  ventilated 
by  a  system  of  air  ducts  separate  from  the  regular  sys- 
tem, or  better  yet,  direct  from  the  open  air.  There  should 
be  at  least  one  closet  for  every  twenty  men  employees  if 
urinals  are  used,  and  at  least  one  for  every  fifteen  female 
employees.  Needless  to  say,  the  toilet  rooms  should  be 
kept  scrupulously  clean  and  should  be  light  and  bright. 

Means  for  washing  should  be  pro\aded  in  connection 
with  dressing  rooms  and  toilets.  Enameled  iron  sinks 
or  basins  have  been  found  best.  There  should  be  one 
basin  for  every  fifteen  employees.  Hot  water  as  well 
as  cold  should  be  made  available,  since  hot  water  is  nee- 


Welfare  Work  215 

essary  in  most  cases  to  cleanse.  The  soap  cake  is 
unsanitary  if  used  by  more  tlian  one  person.  Tlie  best 
arrangement  is  the  bottle  containing  soap  solution  or 
soap  powder.  It  is  not  only  sanitary  but  also  most  eco- 
nomical in  the  long  run.  The  roller  towel  has  absolutely 
no  place  in  the  store.  If  individual  hand  towels  cannot 
be  provided,  paper  towels  should  be  used. 

Lunch  Eooms 

Every  store  in  which  employees  bring  their  lunches  to 
be  eaten  at  noon,  should  provide  a  suitable  lunching  place 
or  room.  It  is  most  important  that  this  place  should  be 
cheerful  and  attractive,  since  the  surroundings  at  meals 
affect  the  appreciation  of  the  meal  and  indirectly  the 
digestion.  Comfortable  chairs  and  tables,  neat  and  clean, 
should  be  installed  for  the  employee's  use.  Some  stores 
go  farther  and  provide  the  room  with  decorations,  pic- 
tures, and  statuary.  It  has  even  been  found  advantageous 
to  provide  a  piano  or  a  phonograph  to  supply  music  dur- 
ing the  luncheon  hour.  A  few  minutes  of  recreation  fol- 
lowing is  an  excellent  thing.  Music,  singing,  or  even 
dancing  for  a  few  moments  are  found  beneficial.  These 
exercises  cause  the  employee  to  relax  mentally  and  thus 
rest  from  the  regular  work. 

Some  of  the  larger  stores  go  farther  and  provide  not 
only  a  suitable  lunch  room  but  also  lunches  at  small  cost 
to  the  employees.  Under  this  system  a  well-balanced 
luncheon  is  sold  to  the  employee  at  from  10  to  20  cents. 
Despite  the  fact  that  appetite  is  natural,  we  all  have  to 
learn  how  to  eat  for  best  physical  eniciency.  Education 
in  this  respect  can  come  in  no  better  way  than  a  prop(»rly 
served  meal.  Indoor  workers  need  to  use  more  care  in 
the  selection  of  foods  than  those  doing  heavy  outside 
work;   iience   lunches  y)repar(Ml   with   reference   to   their 


216  Retail  Store  Management 

nutritive  values  for  store  workers  and  sold  to  employees 
at  low  cost  is  one  of  the  best  possible  forms  of  welfare 
work. 

To  help  educate  the  employees  in  selecting  proper  foods 
for  their  needs,  some  stores  hang  poster  bulletins  on  the 
walls  showing  the  food  values  of  various  foods  offered, 
and  suggesting  various  well-balanced  combinations.  The 
information  given  on  these  wall  bulletins  is  supplemented 
from  time  to  time  by  talks  from  physicians,  nurses,  or  the 
head  of  the  welfare  department  on  hygienic  eating.  The 
Department  of  Agriculture  at  Washingion  publishes  some 
valuable,  illustrated  charts  showing  the  nutritive  values 
of  all  common  foods  that  should  find  a  place  in  the  collec- 
tion of  material  in  store  welfare  departments  generally. 

Rest  Rooms 

In  addition  to  the  dressing  rooms  and  lunch  rooms 
there  should  be  a  separate  room  for  each  sex,  set  aside 
as  a  rest  room ;  a  quiet  retreat  where  a  worker  who  does 
not  feel  well  may  go  for  a  short  rest.  Silence  should  be 
the  rule  here.  These  rooms  may  very  well  be  a  part  of 
the  store  hospital  system  to  be  mentioned  later  in  the 
chapter. 

Seats  for  Salespeople 

Another  matter  that  has  received  consideration  from 
welfare  departments  is  the  provision  of  seats  for  sales- 
women back  of  the  counters  to  be  used  when  the  sales- 
women are  not  busy  with  customers.  Several  states  have 
passed  laws  requiring  that  such  seating  be  provided.  It 
is  a  reflection  upon  the  business  of  retailing  that  such 
legislation  has  been  necessary  to  point  out  the  need  for 
seats,  particularly  for  women. 

Good  salesmanship  requires  that  salespeople  must  be 


Welfare  Work  217 

on  their  feet  while  waiting  upon  customers.  Customers 
do  not  like  to  be  served  by  salespeople  who  are  seated. 
Salespeople  cannot  properly  show  goods  while  seated. 
But  a  rule  that  salespeople  should  never  sit  down  while 
in  the  store  is  as  out  of  place  and  out  of  date  as  the  use 
of  powdered  wigs  for  men  in  polite  society.  Salespeople 
should  be  taught  to  get  up  and  come  forward  promptly 
to  meet  customers,  but  that  they  may  sit  down  at  any 
other  time,  if  their  work  is  in  good  order. 

There  should  be  a  seat  for  every  salesperson,  conven- 
iently located  and  large  enough  to  be  comfortable.  The 
folding  tyipe  will  probably  be  found  most  economical  in 
service,  as  it  may  be  folded  up  and  out  of  the  way  when 
not  in  use. 

Anything  that  a  store  can  do  for  the  comfort  of  its 
employees,  not  interfering  with  the  purpose  of  the  store 
— selling  goods  to  customers — is  likel)'  to  prove  bene- 
ficial to  the  selling  itself. 

Padded  Floors 

Some  stores  not  only  provide  seats  for  their  sales- 
people but  also  cover  the  floor  back  of  the  counters  with 
rubber  matting  or  pads  to  make  it  easier  for  the  sales- 
people when  on  their  feet.  Everyone  who  has  had  any 
experience  in  selling  knows  how  vital  cntlmsiasm  and 
energy  are  to  success.  It  is  diflieult  for  a  salesperson 
with  aching  feet  or  legs  to  be  either  energetic  or  enthusi- 
astic with  customers;  hence  these  provisions  for  tlnMi* 
coniff)rt  really  licij)  tlif  salespeople  to  conserve  their 
energy^  to  be  used  more  entirely  in  salesmanship. 

Pl{EVENTIu^  ui'  Injuries 

Injuries  of  various  kinds  are  likely  to  li.ippen  to  store 
employees.      F.ills    and    resulting   sprains    ;iii<l    bruiseB, 


218  Retail  Store  Management 

burns,  ciiis,  splinters  in  the  flesh,  and  foreiji:n  bodies  in 
the  eye  are  some  of  the  most  common.  The  welfare 
department  must  seek  to  eliminate  chances  of  mishap  as 
much  as  possible.  Slippery  places  need  guarding.  Hand 
rails  should  be  placed  wherever  people  are  likely  to  fall. 
Any  dangerous  machinery  or  mechanical  devices  should 
be  adequately  protected  by  safety  devices,  which  can  be 
made  or  purchased  for  every  purpose. 

FiEE  Prevention 

Another  matter  which  logically  comes  under  the  direc- 
tion of  the  welfare  department  is  fire  protection,  but 
because  of  the  late  development  of  welfare  work  and  the 
ancient  need  for  protection  from  fire,  very  few,  if  any, 
stores  have  this  work  taken  care  of  by  the  welfare  depart- 
ment. 

Fires  in  retail  stores  are  caused  mainly  by  the  follow- 
ing methods : 

1.  Matches  carelessly  thrown  away  while  lighted. 

2.  Matches  gnawed  by  mice. 

3.  Matches  ignited  by  weights  falling  upon  them. 

4.  Defective  heating  systems. 

5.  Defective  lighting  systems. 

6.  Explosion  of  gasoline  or  kerosene. 

7.  Smoking,  or  fire  started  from  cigar  stumps  thrown 
away. 

8.  Defective  wiring. 

9.  Inflammable  decorative  material  hung  near  the 
lights. 

10.  Ashes  left  near  inflammable  material. 

11.  Oily  and  waste  material,  rubbish,  dirt,  and  other 
matter. 

12.  Spontaneous  combustion. 

Most  fires  are  preventable,  and  most  fires  that  start 


Welfare  Work  219 

can  be  put  out  before  damage  is  done  if  the  store  has  a 
proper  system. 

Fireproof  construction  should  be  the  rule  in  store  archi- 
tecture henceforth,  and  old  buildings  when  remodeled 
should  be  made  to  conform  to  this  rule  as  nearly  as 
possible. 

Proper  precautions  should  be  taken  to  have  plenty  of 
exits  for  the  use  of  all  in  the  building,  both  workers  and 
customers,  in  case  of  fire.  All  doors  should  swing  out- 
ward and  should  be  constructed  so  as  to  open  from  the 
inside  when  pressure  is  applied  no  matter  how  closed  or 
locked.  Upper  floors  should  have  more  than  one  stair- 
way or  method  of  getting  to  the  ground.  The  fire  escapes 
should  be  built  on  the  stairway  and  not  the  ladder  plan. 

Every  store  having  upper  floors  should  conduct  fire 
drills  from  time  to  time,  to  show  the  employees  how  to  get 
out  of  the  building  quickly  and  safely.  All  should  be 
instructed  carefully  to  go  directly  out  in  the  case  of  fire 
signal  and  not  attempt  to  get  to  the  dressing  rooms  for 
outer  clothing  and  hats. 

Every  store  buikling  should  be  equipped  with  some 
fire  fighting  apparatus,  and  some  employees  should  be 
trained  in  the  use  of  this  apparatus.  For  local  fires, 
chemical  extinguishers  are  valuable.  These  should  be 
located  at  regular  intervals  in  conspicuous  places.  Stand- 
pipe  and  hose  should  also  be  in  the  store  equipment  on 
every  floor,  and  certain  of  the  salesmen  nearby  responsi- 
ble for  its  use  in  case  of  a  blaze. 

The  employees  named  for  taking  charge  of  fire  extin- 
guishers in  case  of  danger  should  be  organized  as  a  store 
fire  company  with  oflicers  and  rules.  Both  ])roperty  and 
lives  rest  in  their  Imiids  in  case  of  danger,  hence  the  need 
for  organization  and  training. 

Automatic   sprinkler  systems  have  been    found   very 


220  Retail  Store  Management 

effoctivo  in  protecting  stores  from  disastrous  fires.  The 
principle  of  the  automatic  sprinkler  is  simple.  Water 
under  pressure  is  held  in  pipes  that  are  distributed  evenly 
all  over  the  building,  generally  a  few  inches  below  the 
ceilings  in  each  room.  At  regular  distances,  a  few  feet 
apart,  valves  are  placed,  fixed  in  place  by  soft  materials 
that  melt  at  a  temperature  of  about  160  degrees  and 
cause  the  valves  to  open  and  a  water  spray  to  flow  in  all 
directions.  When  a  fire  starts  in  any  department,  night 
or  day,  the  heat  of  the  fire  will  cause  the  valves  in  the 
A^icinity  to  open,  and  the  water  will  drench  the  surround- 
ings and  put  out  the  fire.  Merchandise  will  be  damaged 
by  the  water,  but  the  greater  total  loss  by  fire  is  obviated. 

Miscellaneous  Welfare  Activities 

The  welfare  departments  of  various  stores  perform 
many  other  functions  for  their  employees.  Some  of  these 
will  merely  be  listed,  as  for  example,  loaning  umbrellas 
and  rubbers  on  wet  days,  putting  a  sewdng  machine  in  the 
woman's  room  for  use  of  employees  who  wish  to  take  the 
proverbial  stitch  in  time,  conducting  a  store  library  and 
loaning  books  and  periodicals,  signing  library  cards  and 
otherwise  encouraging  the  use  of  the  public  library,  help- 
ing to  form  recreation  clubs  of  various  kinds  among  the 
emplo3''ees,  helping  to  organize  societies  for  the  study 
of  art,  music,  literature,  language,  domestic  science,  phys- 
ical training,  and  so  on,  arranging  summer  outings  for 
store  groups,  giving  half  holidays  during  slack  seasons, 
providing  legal  advice  for  those  desiring  it,  and  various 
other  things. 

Economic  Welfare  Work 

The  welfare  department  is  also  concerned,  or  should 
be,  with  the  economic  welfare  of  the  employees  of  the 


Welfare  Work  221 

store.  It  should  serve  as  the  representative  division  of 
the  store  in  assisting  in  the  management  of  mutual  bene- 
fit associations  organized  among  the  employees  for  assist- 
ing members  in  case  of  sickness  or  distress.  A  typical 
constitution  of  a  store  benefit  association  will  be  found 
at  the  end  of  the  chapter.  In  some  cases  membership  is 
voluntary,  in  others  compulsory.  In  the  constitution 
quoted  at  the  end  of  the  chapter  membership  is  com- 
pulsory. 

Many  other  types  of  economic  activities  may  be  taken 
up  by  the  welfare  department.  As  time  goes  on  the  im- 
portance of  this  part  of  the  work  is  likely  to  be  found  of 
increasing  importance.  Some  stores  now  provide  life 
insurance  for  their  employees,  buying  the  insurance  from 
well-known  and  well-established  life  insurance  concerns. 
A  few  stores  have  provided  old-age  retirement  and  pen- 
sion funds.  More  are  certain  to  do  this.  Stores  in  large 
cities  should  through  the  welfare  department  help  new 
employees  to  find  suitable  rooming  places.  Some  stores 
assist  in  the  organization  of  home  owning  organizations 
among  their  older  employees,  modeled  after  the  more 
public  building  and  loan  associations.  A  large  number 
of  stores  sell  goods  to  employees  for  their  own  use  or  for 
the  use  of  those  dependent  upon  them  at  a  discount,  run- 
ning from  10  j)er  cent  to  20  per  cent  off  regular  prices. 
In  a  few  cases  cooperative  societies  are  formed  within 
stores  for  the  economic  purchase  of  such  supplies  as  coal 
ill  carload  lots. 

Several  large  stores  conduct  savings  banks  for  their 
employees  paying  fairly  high  rates  of  interest  for  de- 
posits, and  thus  encouraging  tlniff.  A  r<\v  encourage 
the  use  of  savings  in  the  purchase  of  stock  or  an  interest 
in  tlie  concern.  These,  and  Jiiany  other  (h'vices  of  wel- 
fare work,  have  groat  value  if  jjrofxM'ly  carried  on. 


222  Retail  Store  Management 

The  welfare  department  should  also  concern  itself  and 
cooperate  with  the  employment  department  in  securing  a 
just  system  of  remuneration  for  the  employees.  This  will 
involve  a  consideration  and  study  of  the  possibilities  and 
workings  of  the  various  methods  of  remunerating  sales- 
people, such  as  time  rates,  commissions,  bonus  systems, 
premiums,  profit  sharing,  and  so  on.  In  these  studies  the 
welfare  department  will  act  in  an  advisory  capacity  to 
the  employment  department,  and  seek  to  present  the 
employees'  side  in  the  discussions. 

Personal  Relationship  to  Employees 

A  very  necessary  part  of  a  welfare  department  system 
is  that  someone  in  the  department,  preferably  the  head, 
should  be  able  to  meet  the  employees  frequently  in  an 
informal,  impersonal  way.  The  employees  should  recog- 
nize in  this  person  a  sympathetic  friend,  an  attorney  for 
their  cause  in  case  of  conflict  with  their  superiors,  and 
a  good  adviser  in  case  of  trouble.  The  welfare  worker 
who  is  to  fill  this  responsible  position  should  have  had 
considerable  experience  with  life,  and  a  broad,  tolerant 
outlook.  Since  most  of  the  employees  in  large  retail 
stores  are  women,  this  personal  work  in  the  welfare 
department  should  be  done  by  a  woman,  mature  in  years 
and  judgment,  but  young  enough  to  appreciate  the  diffi- 
culties of  youth.  She  should  be  a  sort  of  mother  for  the 
store  family  to  whom  any  or  all  would  feel  free  to  come 
for  advice,  for  consolation,  or  for  inspiration. 

There  remains  one  large  problem  for  welfare  depart- 
ments to  tackle  so  far  unmentioned,  and  up  to  this  time 
unsolved  in  American  retailing,  and  this  is  the  problem 
of  unemployment  for  a  considerable  portion  of  the  year 
and  tlie  high  rate  of  turnover  in  the  employment  of  store 
workers.     The  average  of  unemployment  is  more  than 


Welfare  Work  223 

ten  weeks  per  year  in  many  large  city  stores,  time  that 
is  lost  to  both  individual  and  society.  Many  large  stores 
have  to  hire  twice  as  many  people  during  the  year  as  are 
regularly  working  in  order  to  keep  a  full  force  on  hand. 
The  hire-and-fire  system  has  some  defects  that  probably 
only  the  welfare  departments  can  solve.  The  solution 
has  not  been  reached  by  any  means  so  far  proposed  in 
any  American  store,  but  this  is  no  reason  why  the  matter 
should  not  be  studied  and  experiments  made,  to  the  end 
that  a  solution  may  some  day  be  found. 

Health  or  Hygienic  Work 

The  last  line  of  welfare  work  to  be  mentioned  here  is 
one  of  the  most  important  of  all,  namely  promoting  indi- 
vidual health  efficiency,  upon  which  all  other  efficiency 
rests. 

The  Physical  Examination 

As  a  first  step  in  the  direction  of  raising  the  standard 
of  health  of  the  emploj^ees,  the  medical  and  physical 
examination  must  be  employed,  not  only  at  the  time  of 
employing  the  applicant  for  a  position,  but  also  periodi- 
cally for  every  worker  in  tlie  store,  male  and  female,  old 
and  young. 

The  primary  value  of  the  medical  examination  of  appli- 
cants to  tlie  store  is  the  discovery  of  causes  unfitting 
applicants  for  store  work,  as  well  as  contagious  diseases 
and  other  conditions  imperiling  the  welfare  of  other 
workci's.  As  an  illustration  of  the  lattci",  it  may  be 
pointed  out  that  in  stores  where  examiiuitions  are  now 
required,  medical  examiners  discover  among  applicants 
for  positions  tliosc  wlio  have  contagious  diseases  of  wliieli 
they  are  tliemsclves  not  always  aware.  Scabies,  ring- 
worm,  impetigo,   and    pediculosis   are  detected   and   tlio 


224 


Retail  Store  Management 


carriers  kept  from  contributing  their  troubles  to  others. 

The  physical  and  medical  examination,  itself,  should  be 
thorough  and  should  be  made  by  a  competent  physician 
or  someone  trained  in  this  work.  In  large  stores  the  wel- 
fare department  should  have  the  services  of  a  physician 
for  part  time  at  least  for  this  kind  of  service. 

The  points  to  be  covered  in  the  examination  may  be 
indicated  in  outline  form. 


POINTS    COVERED    IN    PHYSICAL    EXAMINATION 


Family  history 

Appearances 

Nutrition 

Height 

Weight 

Chest 

Girth 

Posture 

Rupture 

Arches  of  feet 

Veins  of  legs 

Curvature  of  spine 

Other  physical  deformities  or 
asj'mmetries 

Temperature 

Pulse — before  and  after  exer- 
cise 

Blood  pressure 

Heart 

Blood  vessels 


Lungs 

Stomach 

Abdominal  organs 

Kidney  and  urine 

Genito-urinary  tract 

Nose 

Throat 

Mouth 

Teeth 

Gums 

Tongue 

Ears 

Eyes 

Personal  hygiene 

Habits  of  living 

Eating 

Sleep 

Clothing 

Exercise 

Fresh  air 


As  a  result  of  the  examination  the  welfare  department 
can  at  once  place  itself  in  the  position  of  being  of  personal 
help  to  the  individual  in  building  better  health  and  work- 
ing ability. 


Welfare  Work  225 

Medical  Services 

In  this  connection  the  stores  can  do  much  for  the  em- 
ployee by  making  provision  for  the  services  of  dentists, 
oculists,  ear,  nose,  and  throat  specialists,  and  chiropodists 
at  reduced  prices.  In  fact,  it  may  pay  the  store  to  con- 
tribute some  part  of  the  expense  in  many  cases. 

Hospital  and  Nueses 

As  a  part  of  the  medical  equipment  of  the  store,  there 
should  be  supplies  of  first  aid  material  at  hand  and  in 
the  larger  stores  an  examination  and  operating  hospital 
room. 

The  hospital  should  be  presided  over  by  a  trained  nurse, 
and  this  official  may  be  of  great  service  in  a  number  of 
ways,  such  as  giving  advice  on  the  treatment  of  minor 
ailments  such  as  colds,  neuralgia,  female  troubles,  burns, 
bruises,  etc.  The  nurse  may  also  assist  in  the  welfare 
work  of  the  store  bj^  giving  instruction  in  hygiene  to  suit 
the  needs  of  the  workers  in  the  store. 

Some  stores  also  have  a  visiting  nurse  who  gives  her 
attention  to  employees  that  are  out  because  of  illness. 

Welfare  Work  and  the  Happiness  of  Employees 

In  conclusion,  all  welfare  work  aims  at  providing  the 
conditions  both  without  and  within  the  employee  for  high- 
est efficiency.  Part  of  these  conditions  are  physical  niid 
environmental,  and  part  of  them  are  psychical  or  mental. 
Up  to  the  present  time,  some  stores  have  gone  far  in  })i-o- 
viding  the  proper  environmental  conditions,  such  as 
proper  lighting,  heating,  ventilation,  etc.,  but  have  as  yet 
(l()n<'  but  little  to  secure  the  i)ro[)er  mental  conditions 
needed  for  efficiency.  Only  a  few  have  seen  the  need  for 
developing  l)oth  sides  systematically. 

Th(»    rewards    of    welfare    woik    ])i"()ii('rly    (';ii-i-i('(l    on 


226  Retail  Store  Management 

should  appear  as  positive  results  on  the  assets  side  of 
the  concern's  balance  sheet,  but  greater  than  the  result  in 
dollars  and  cents  is  the  development  of  manhood  and 
womanhood  among  the  store  employees  to  more  complete 
self-realization.  The  welfare  department  by  its  activ- 
ities opens  the  way  for  each  individual,  so  far  as  possible, 
within  the  institution  to  grow  to  full  stature  physically, 
mentally,  and  morally.  This  process  of  man  building  is, 
after  all,  the  greatest  result. 

Business  exists  solely  for  the  purpose  of  satisfying 
human  wants.  Nowhere  is  this  clearer  than  in  a  retail 
store  that  lives  day  by  day  by  the  grace  and  goodwill 
of  customers  who  come  to  it  to  be  served.  Is  it  not,  there- 
for, highly  appropriate  that  business,  the  retail  business, 
should  also  assist  in  the  development  of  those  who  are 
employed  within  its  doors!  Welfare  work  properly  car- 
ried on  is  doubly  repaid,  first  in  financial  return ;  second, 
in  the  satisfaction  that  comes  from  being  of  service  to 
one's  kind. 

The  by-laws  of  a  store  mutual  benefit  association  which 
follow  may  well  be  studied  with  great  care,  because  they 
represent  the  constitution  of  a  plan  which  is  in  actual 
operation  in  a  certain  department  store.  Points  of  par- 
ticular interest  are  the  purpose  of  the  organization,  the 
system  of  government,  the  machinery  of  government,  the 
membership,  the  graduated  system  of  dues  payment,  and 
finally  the  benefits  actually  conferred  upon  its  members. 
This  association  is  purely  an  employee  benefit  organiza- 
tion. Its  only  direct  connection  with  the  store  manage- 
ment consists  in  the  power  to  deduct  the  dues  of  its  mem- 
bers from  the  pay  roll.  This  association  is,  therefore,  a 
good  example  of  what  can  be  done  by  cooperation  without 
imposing  a  burden  upon  the  store  organization  itself. 
Some  stores  make  a  contribution  to  the  benefit  fund,  but 
that  is  a  matter  for  individual  decision  in  each  case. 


BY-LAWS  OF  THE MUTUAL  BENEFIT 

ASSOCIATION 

Article  I 


Name. — The  association  shall  be  called  " 

Mutual  Benefit  Association. ' ' 

Article  II 

Object. — The  object  of  this  association  shall  be  to  assist  the  members 
thereof  in  sickness  or  distress,  and  to  promote  a  spirit  of  good  fellowship 
and  fraternity,  and  for  social  enjoyment. 

Article  III 

Officers. — There  shall  be  a  board  of  eleven  directors,  who  shall  be 
elected  tjy  a  majority  vote  of  members  of  the  association,  who  shall  serve  for 
one  year,  or  until  their  successors  are  elected. 

This  Board  of  Directors  shall  elect  from  their  numl)er  a  President,  a 
First  and  Second  Vice-President,  a  Secretary,  and  a  Treasurer. 

Article  IV 

Pre.sident  and  Vice-President.s. — It  shall  be  the  duty  of  the  President 
to  preside  at  all  mootinj^s  of  the  Board  of  Directors.  He  sliall  also,  jointly 
with  no  less  than  three  of  tlic  Board  of  Directors,  have  power  to  call  a  special 
meeting  of  the  board  or  of  the  association  whenever,  in  their  opinion,  the 
interest  of  the  association  requires  it.  In  the  absence  of  the  I'rosidcnt,  the 
First  Vice-President,  and  in  absence  of  tliem  all,  tlien  the  Secretary  shall 
perform  the  duties  of  President. 

Secretary. — It  shall  be  the  duty  of  the  Secretary  to  keep  the  minutes  of 
the  meetinRM,  to  issue  calls  for  special  meetings,  under  th(>  directions  of  the 
Tioard  of  Directors. 

Treasurer. — It  shall  be  tlm  duty  of  the  Treasurer  to  keep  a  corrodt 
account  of  the  funds  of  the  association,  to  deposit  all  funds  in  an  f/rgnnized 
bank  or  to  invest  in  such  securities  a]>|irnvcd  by  the  T?n:ird  of  Directors, 
It  shall  further  be  the  duty  of  the  Treasurer  to  make  all  deposits  or  invest- 
ments in  the  name  of  the  association,  to  pay  all  bills  and  claims  of  every 
kind   against   the   association,   subject    to   the   approval    of    the    Boar. I    of 

227 


228  Retail  Store  Management 

Directors.  All  checks  to  be  issued  and  signed  by  the  Treasurer,  to  be 
oountorsignpd  by  President,  Vice-President,  or  Secretary. 

The  Treasurer  sliall  give  bond  in  the  sum  of  $3,000.00,  to  be  approved 
by  the  Board  of  Directors,  which  the  association  shall  pay  for. 

He  shall  also  give  the  Board  of  Directors  and  Auditing  Committee 
opportunity  to  examine  his  accounts  when  they  may  desire. 

Article  V 

DraECTORS. — The  Board  of  Directors  shall  have  power  over,  and  audit  all 
claims  and  accounts  of  the  association,  and  have  general  control  over  its 
affairs,  and  to  levy  special  assessments  on  the  members,  when  in  tlieir  opinion 
it  is  necessary  to  do  so. 

They  shall  employ  a  person  or  persons,  at  the  best  possible  terms,  to 
investigate  all  claims  of  sickness  of  its  members. 

Article  VI 

Auditing  Committee. — The  Auditing  Committee  shall  meet  semi-annually 
for  the  purpose  of  examining  and  auditing  the  accounts  of  the  Treasurer 
and  full  reports  thereof  to  the  Board  of  Directors,  said  Auditing  Committee 
to  be  appointed  by  the  President. 

Article  VII 

Board  of  Directors. — Meetings  to  be  held  first  Wednesday  of  eacb 
month — in  ease  of  legal  holiday  the  follovdng  Wednesday — or  as  often  as 
business  requires. 

Specials. — Extra  meetings  may  be  called  by  the  President  whenever  he 
or  three  of  the  Board  of  Directors  consider  it  necessary. 

Article  VITI 

Vacant  Offices. — In  case  of  vacancies  arising  in  any  official  position  or 
in  the  Board  of  Directors,  a  majority  of  tlie  Board  of  Directors  shall  till 
such  vacancies  until  the  next  annual  election. 

Article  IX 

Membership. — All  employees  of as  per  their 

application   for  employment,  are  members  of  the  association,  and  all  em- 
ployees severing  their  connection  with shall  by  that  fact 

be  rendered  non-members,  and  will  not  be  entitled  to  any  benefits  of  the 
association. 

Article  X 

Dues. — All  members  receiving  a  salary  of  $3. .50  and  less  shall  pay  a 
monthly  due  of  10  cents.     Members  receiving  a  salary  of  from  $3. .50  to  $5.00 


Welfare  Work  229 

shall  pay  a  monthly  due  of  15  cents.     Members  receiving  a  salary  of  $5.00 
and  over  shall  pay  a  monthly  due  of  25  cents. 

Article  XI 

Bexefits. — For  sick  benefit,  members  will  be  paid  one-half  of  their 
weekly  salary  per  week,  but  in  uo  instance  shall  this  sum  be  more  than  $5.00 
per  week  benefit — and  for  no  less  than  one  week's  sickness — and  in  no 
instance  shall  any  beneficiary  receive  benefit  for  more  than  six  weeks  in 
any  calendar  year. 

Article  XII 

Sec.  1.  Death  Benefits. — A  provision  has  been  made,  whereby  a 
certain  sum  will  be  paid  for  burial  expenses  of  deceased  members  who  have 

been  in  the  employ  of for  at  least  six  months, 

as  follows: 

To  members  paying  10-cent  monthly  dues,  $25.00. 

To  members  paying  15-cent  monthly  dues,  $35.00. 

To  members  paying  25-cent  monthly  dues,  $50.00. 

Sec.  2.  .  In  case  of  a  death  of  a  member  of  the  association  the  Board 
of  Directors  will  furnish  one  carriage  for  those  in  the  department  (wliere 
the  deceased  was  employed)   desiring  to  attend  the  funeral. 

Sec.  3.  It  shall  be  at  the  discretion  of  the  Board  of  Directors  to  order 
flowers  in  case  of  the  death  of  a  member  of  the  association,  not  to 
exceed  $5.00. 

Article  XIII 

New  Membership. — No  one  shall  l^e  eligible  to  sick  benefits  who  has  not 
been   a  meml)er  of  the  association  tliirty   days.     Members  who   have  paid 

the  first  mouth 's  dues,  and  who  shall  leave  the  employ  of 

hiefore  thirty  days  have  expired,  no  benefit  will  be  paid  them,  ami  tho  one 
month  's  dues  will  be  refunded  upon  demand. 

Article  XIV 
Payment  of  Dues. — The  dues  shall  be  payable  the  first  Tuesday  of 
every  month,  and  tlie  TreaHurer  sliall  liave  ])0wer  to  collect  these  dues  from 

the  salary  pay  roll  of ,  who  in  turn  shall  deduct 

the  amount  from  the  salaries  of  such  cmidoyees. 

Article  XV 
Permanent  Fund. — A  permanent  fund  of  not  less  than  $1,000.00  shall 
be  hold   in  the  treasury.     Wlienever  the   fund  shall  bo  less  tlian   $1,000.00 
an  assessment  sliall  be  made  on  encli  and  every  member  of  one  montli 'b  dues. 

Ahttcle  XVT 
Officers'   Salarie.'?. — No   officer   or   director   of   this   association   shall 
receive  any  salary  whatsoever  for  their  services,  with  the  exception  of  the 


230  Retail  Store  Management 

Treasurer  aiid  Secretary,  whose  salaries  shall  be  fixed  by  the  Board  of 
Directors. 

Article  XVII 

Epidemic. — In  case  of  an  epidemic  raging,  the  number  of  weeks'  benefit 
to  be  paid  members  shall  be  reduced  to  three  weeks.  » 

Article  XVIII 

Entertainments,  Etc. — The  Board  of  Directors  shall  be  empowered  to 
give  entertainments,  such  as  theatricals,  concerts,  balls,  boat  and  land 
excursions,  when  in  their  judgment  it  will  be  a  benefit  for  the  association. 

Article  XIX 

Election  of  Officers. — The  election  of  officers  of  the  association  to 
occur  annually  the  first  Wednesday  in  January. 

In  case  the  first  Wednesday  above  specified  is  a  legal  holiday,  then  the 
following  Wednesday. 

Article  XX 

Payment  of  Claims. — Payment  of  claims  against  the  association  to  be 
made  by  regularly  drawn  order  on  the  Treasurer,  which  order  shall  be 
countersigned  by  the  President,  Vice-Presidents,  or  Secretary. 

Article  XXI 

Sec.  1.  Notification  of  Sickness. — Notification  of  sickness  shall  be 
made  to  the  Secretary  immediately. 

When  this  rule  is  not  complied  with  members  will  not  receive  their 
sick  benefit. 

Sec.  2.  Wliereby  any  employee  absenting  himself  or  herself  on  an 
indefinite  vacation  without  first  notifying  the  Superintendent's  office  and 
while  on  said  vacation  should  be  taken  sick  or  meet  with  an  accident,  no 
claim  will  be  allowed. 

Article  XXII 

Hospital. — Any  member  of  the  association  wishing  to  enter  a  hospital 
of  Chicago  may  do  so  free  of  cost  by  applying  to  the  Secretary,  but  for 
no  longer  than  three  weeks,  and  shall  not  interfere  in  any  way  with  the 
regular  sick  benefits  due  them. 

Article  XXIII 

These  by-laws  may  be  changed  at  a  regular  meeting  of  the  Board  of 
Directors  by  a  two-thirds  vote. 


Welfare  Work  231 

TEST  QUESTIONS 

1.  Under  whose  direction  should  welfare  work  be  placed? 

2.  Enumerate  some  of  the  objects  and  purposes  of  welfare 
work. 

3.  What  is  the  most  fundamental  Avork  of  the  welfare  depart- 
ment ? 

4.  What  principles  should  govern  store  lighting? 

5.  Why  is  store  ventilation  important  for  securing  efficiency 
in  salespersons  and  in  sales  ? 

6.  What  is  the  most  desirable  temperature  for  store  efficiency  ? 

7.  How  can  a  lower  temperature  be  made  to  produce  as  com- 
fortable a  feeling  as  a  higher  temperature  ? 

8.  In  what  other  practical  ways  can  the  health  and  efficiency 
of  store  workers  be  promoted  ? 

9.  What  rule  should  be   observed   for  preventing  fires   in 
stores  ? 

10.  Wliat  welfare  activities  may  be  considered  for  promoting 
the  personal  relations  of  employees  ? 


CHAPTER  XVII 
democracy  in  the  store 

Employees'  Share  in  Government  of  Store 

As  an  institution,  the  store  needs  government  the  same 
as  a  state,  a  city,  an  army,  or  a  school.  But,  as  in  other 
institutions,  store  government  is  at  its  best  only  when  it 
springs  from  the  minds  and  understanding  of  those  gov- 
erned, in  this  case  the  store  employees.  Discipline,  as 
such  should  rest  upon  principles  and  reasons  recognized 
and  approved  by  the  employees.  Duties  should,  similarly, 
be  performed  with  intelligence  and  self -direction  rather 
than  from  command.  In  short,  there  should  be  a  strong 
element  of  constructive  democracy  in  store  government 
to  which  both  employees  and  employers  should  feel  bound. 

Suggestions  from  Employees 

In  every  store  it  should  be  made  easy  for  any  employee 
to  make  suggestions  concerning  the  conduct  of  the  busi- 
ness, or  relating  to  his  own  position  in  it,  for  either 
critical  or  constructive  purposes.  The  most  successful 
businesses  in  the  world  owe  their  growth  to  the  help  and 
suggestions  of  their  own  employees.  The  most  successful 
managers  are  those  who  can  get  the  most  help  from  their 
employees. 

Not  only  should  suggestion  for  saving  time,  expense, 
or  labor  be  welcomed;   they   should  be   systematically 

232 


Democracy  in  the  Store  233 

sought  and  obtained.  Every  employee  should  be  asked 
to  consider  himself  an  eye  of  the  business  on  the  lookout 
for  good  ideas  that  may  be  put  to  use.  Some  concerns 
have  standing  offers  of  sums  of  money  for  suggestions 
of  any  kind  that  can  be  put  to  use  in  the  store.  One  store 
pays  a  dollar  for  every  suggestion  it  can  use.  Sugges- 
tions are  wanted  not  only  on  how  to  improve  the  business 
but  also  on  how  to  make  the  store  a  better  working  place, 
more  comfortable,  and  more  likeable. 

The  Employee's  Right  of  Appeal 

The  employee  should  also  have  the  opportunity  to 
carry  his  difficulties  to  some  sympathetic  person  in  the 
store,  the  welfare  department  head,  as  was  suggested  in 
the  last  chapter,  if  possible,  or  some  other  mature  person. 
Likewise,  the  employee  should  have  the  right  of  appeal 
in  even,'  case  of  absolute  disagreement  with  his  or  her 
immediate  superior,  and  without  fear  that  this  slip  will 
cause  trouble. 

In  some  stores  the  appeal  is  made  to  the  general  man- 
ager. In  large  stores  it  might  be  well  to  have  it  taken 
up  by  a  sort  of  arbitration  or  referee  board  composed  of 
representatives  of  both  the  employers  and  employees. 

No  person  sliould  bo  dismissed  from  the  employ  simply 
upon  the  request  or  complaint  of  one  department  head  in 
the  store.  The  superintendent  of  employees  should  sec 
that  at  loast  one  other  chance  is  given  in  some  other 
department  before  permitting  the  employment 'depart- 
ment to  diseliarge  the  employee. 

Stores  ;ire  lie^iiniing  to  see  the  cost  in  uioiu\v  and, 
greater  still,  in  inefnciencv,  due  jo  Ihe  waste  of  the  *Miire- 
and-fire"  system.  Not  only  is  if  uneconomical  to  Ihe 
eoncern,  it  is  unjust  to  the  employee.  Under  this  sys^ 
tein,  the  masses  of  employees  fed  but  small  incentive  for 


2o4  Retail  Store  Management 

improviiii'-  beyond  a  certain  point.  Further  effort  is  felt 
to  be  useless,  since,  at  the  a])T)roach  of  the  next  slack 
season,  the  position  may  be  lost,  and  with  it  the  oppor- 
tunity to  use  the  skill  acquired,  unless  another  position 
exactly  like  it  can  be  found. 

Unless  some  degree  of  assurance  can  be  given  the 
employee  that  tenure  of  position  will  be  permanent, 
depending  upon  the  manner  in  which  the  work  is  done, 
it  must  be  granted  that  the  usual  careless  attitude  of 
many  employees  is  quite  natural  if  not  logical.  We  are 
not  hero  concerned  with  employees  who  seek  only  tem- 
porary work.  That  constitutes  a  special  problem  that 
should  be  considered  by  itself.  But  employees  who  desire 
permanent  employment  are  entitled  to  more  considera- 
tion than  has  been  given  them  in  the  past  by  a  great  many 
employers. 

Security  of  Employment 

The  modern  business  manager  owes  security  and  per- 
manency of  employment  to  his  workers.  The  obliga- 
tion of  the  industry  extends  further  than  the  legal  and 
contractual  one  represented  by  the  salary  check  at  the 
end  of  the  w^eek  for  w^ork  already  done.  A  concern  that 
finds  it  necessarv  to  dismiss  its  Avorkers  in  large  numbers 
periodically  is  a  misfit  social  institution  and  a  failure  no 
matter  w^hat  financial  condition  is  shown  on  its  balance 
sheet.  It  can  be  shown  that  an  institution  of  this  kind 
does  a  great  deal  of  harm  to  the  community  in  which  it 
exists.  In  time  to  come,  it  is  likely  that  society  must 
prevent  such  institutions  from  operating,  or  at  least  force 
them  to  provide  for  the  unemplojTQent  caused  by  its  sea- 
sonal operations.  Furthermore,  seasonal  operations 
generally  indicate  a  poorly  organized  business  with  high 
overhead;  this  the  management  should  correct. 


Democracy  in  the  Store  235 

Right  To  Help  Determine  "Working  Conditions 

The  employee  should  have  some  share  in  determining 
the  working  conditions  in  the  store.  "VN^ien  rightly  han- 
dled this  right  will  never  be  abused.  If  the  store  is 
improperly  lighted  in  any  part,  the  action  of  employees 
concerned  or  affected  by  the  defect  should  be  sufficient 
to  cause  the  management  to  remedy  the  condition.  If,  in 
the  judgment  of  employees,  the  ventilation,  heating,  or 
cleanliness  of  the  building  need  attention,  if  within  pos- 
sibility, improvements  should  be  made.  The  share  of 
the  employees  in  such  matters  as  these  will  not  only  help 
to  make  the  store  a  more  suitable  place  to  work  in,  but 
vnW  also  tie  the  employees  more  closely  to  it.  What  has 
been  done  for  the  store  at  their  suggestion  helps  to  make 
them  feel  that  it  is  their  store.  Wliat  is  theirs  demands 
their  loyalty  and  interest. 

Right  To  Help  Determine  Wage 

Employees  should  also  have  a  share  in  determining 
their  own  salaries.  It  is  not  meant  by  this  that  they 
should  determine  the  general  wage  levels.  That  would 
be  impossible;  for  wage  levels  are  determined  by  condi- 
tions going  far  beyond  the  confines  of  any  single  store. 
What  is  meant  is  that  individual  adjustments  to  these 
wage  levels  should  not  be  made  arbitrarily  by  the 
employer  or  employment  manager.  The  employee  should 
have  the  chance  to  present  his  or  her  side  of  the  case,  and 
has  a  right  to  know  what  the  argument  is  for  fixing  his 
or  her  salary  at  any  given  point,  and  to  learn  very  defi- 
nitely just  how  tiiat  amount  may  be  increased. 

The  Need  for  T>oarf)s  of  ARr.rrnATioN  or 
OF  Reference 

Again,  it  must  be  suggested  that  there  is  need  in  llie 
larger  stores  particularly  for  7-('i"<'r<'('  Ijoai-ds,  or  .•irhilra- 


236  Retail  Store  Management 

tioii  bodies,  before  wliom  such  matters  as  working  condi- 
tions, amount  of  work  to  be  done,  and  salaries  could  be 
taken  in  case  of  misunderstanding.  Judgment  by  the 
employment  manager  or  by  the  superintendent  of 
employees,  or  even  by  the  general  manager  might  seem 
unfair  to  the  employee,  but  the  decision  of  a  body  of  five 
or  six  co-workers,  after  hearing  all  the  evidence,  would 
be  regarded  as  final. 

The  organization  of  the  board  of  referees  should  be 
such  as  to  secure  an  unbiased  view  of  both  sides  of  the 
question.  Probably  the  head  of  the  welfare  department 
and  the  superintendent  of  employees  should  be  ex-officio 
members.  At  least  two  members  should  be  of  the  same 
rank  as  the  complainant  employee.  A  fifth  member  could 
be  secured  by  common  agreement  of  the  force. 

The  process  of  bringing  matters  for  settlement  before 
this  board  should  be  made  as  simple  as  possible.  Filing 
a  written  notice  with  the  superintendent  of  employees 
should  be  sufficient.  The  board  should  meet  at  some  con- 
venient time  and  hear  the  evidence,  make  such  studies  of 
its  own  as  may  seem  necessary,  and  then  give  its  judg- 
ment to  the  general  manager  of  the  store,  under  whose 
direction  the  execution  of  the  judgment  should  proceed. 

Final  Objects  of  Store  Democracy 

This  may  seem  a  radical  plan  to  many  employers  who 
have  held,  and  are  still  holding,  despotic  sway  as  man- 
agers of  their  stores,  but  it  is  believed  that  it  represents 
the  tendency  of  progress.  Several  stores  already  have 
self-government  associations  of  one  kind  or  another.  In 
an  increasing  number  of  instances,  the  cooperation  of 
employees  is  sought  by  including  their  voices  in  the 
counsels  of  the  firm.     A  few  have  already  adopted  a 


Democracy  in  the  Store  237 

system  of  boards  for  adjudicating  misunderstandings  and 
disputes. 

It  is  not  to  be  expected  that  this  plan  Avill  work  itself. 
It  Anil  need  guidance  and  detailed  management.  It  is  not 
to  be  expected  that  it  will  work  everywhere  without  fail- 
ures. All  that  is  urged  for  it  is  that  it  is  one  method, 
the  most  radical,  perhaps,  but  also  the  most  important, 
when  taken  in  conjunction  with  proper  selection,  educa- 
tion, and  remuneration  of  employees,  for  increasing  the 
interest  and  loyalty  of  employees  for  the  firm. 

It  is  desired  that  store  employees  shall  take  such  an 
interest  in  their  work  as  their  employers  would  if  the 
employers  could  be  in  their  places.  But  it  is  difficult  to 
hire  interest.  Interest  grows  out  of  what  affects  self. 
Yoiir  property,  your  business,  your  sports,  your  troubles, 
and  your  ailments,  I  care  nothing  about.  But  I  am  very 
much  interested  in  7ny  property,  my  business,  my  sports, 
my  troubles,  and  my  ailments. 

You  can  make  me  interested  in  your  business  by  show- 
ing me  how  your  business  will  affect  me,  by  making  me 
a  part  owner  and  part  governor  of,  and  therefore  partly 
responsible  for,  your  business.  This  is  the  logic  that 
underlies  the  bonus  system,  profit  sharing,  and  demo- 
cratic government  in  the  store.  The  despot  must  relax 
liis  grip  and  give  up  some  of  his  power  in  order  that  his 
subordinates  mav  become  more  interested  in  their  work. 
There  is  no  ])usiness  where  the  effects  are  more  directly 
felt  of  interest  in  the  work  or  its  lack  than  among 
employees  who  arc  representatives  of  the  store  t<>  the 
publii'.  Leadership  there  must  be,  but  it  should  l»e  the 
kind  of  h'adcrship  which  causes  others  willingly  to  hciir 
responsibilities  according  to  their  abilities,  rather  than  a 
leadershi[)   which    .ittempts   to   bear   tlu'   whole   load   1)\ 


238  Retail  Store  Management 

so-called  "driving"  methods  of  management.  It  must 
develop  and  lead  forth  the  full  latent  powers  of  the 
organization. 

TEST  QUESTIONS 

1.  "What  is  meant  by  democracy  in  the  store? 

2.  How  may  employees  be  encouraged  to  make  constructive 
suggestions  ? 

3.  What  provisions  should  be  made  for  giving  employees  the 
right  to  appeal  ? 

4.  Why  is  a  sense  of  security  in  employment  a  valuable  asset  ? 

5.  What  provisions  may  be  made  for  the  adjustment  and  arbi- 
tration of  differences? 

6.  How  may  self-interest  be  turned  to  advantage  in  retail  store 
management  ? 


INDEX 


Accounting 

balance   sheet,   83-84 

classification  of  expenses,  78-83 

departmentalization  in,  76-78 

importance  of,  74-75 

inventory,  S6-1U1 

kinds  of  accounts,  75-76 
Accounts    receivable,    purchase    of, 

26-27 
Advertising 

attractive   lines   carried   for   pur- 
poses of,  70 

for  employees,  153-56 

for  positions,  156 

manager,  50-51 

relation  of,  to  display,  50-51 

relation  of,  to  goodwill,  32 
Altman,  Benjamin,  3 
Analysis 

of  a  business,  23-24,  36 

of  positions,  148-53 

of  qualifications,  149-53 
Annual   inventories,    86 
Application    blank    for    prospective 

employees,  155,   157-6U 
Apprenticeship,    2,   178-80,  180-81 
Appropriations  for  buying,  4S-50 
Approval  sales,  142 
Arbitration,  235-37 
Associations 

mutual  benefit,  221 

of  retailers,  4-5 
Auditor,  46,   115-16 
Authorization  of  credit  sales,  118-19 
Awnings,  14 

Balance  sheet,  83-84 
Banking  departmint,  39 

for  finijloyees,  221 
Bargains,  128-30 
Base  of  percentage,  83,  99-100,  131- 

32 
Bill  of  salo,  28 
Blunder  Hlip,  197-99 
Boards  of  arbitration,  235-37 
Bonus,  169-72 

Books  on  rf;taillng.  5,  180,   193 
Bulletin  bo.ufls,  195 
Bureau  of  l!u.sin«HS  Research,  80 
Business  llttrature.  4-5,  59-60,  156, 

180,   192-93 
Buyers 

assist  In  advertising,  50 

education  of.  58-60 

llmlleil    In   rxpendlluro  by  report 
of  sabH.   4S-4'J,   100-105 

necessary  (|ii:i  lltlos  of,  56-58 

HuixTvlse  Inventory-taking,  87 
Buying 

control    of,    by    reports    of   Bales, 
48-49,   100-105 


excessive,  68-69 

expenses  of,  78 

influence    of    local    demands    on, 
61-62 

influence  of  magazine  and  picture 
shows  on,  60-61 

lines  of,  70-71 

novelties,  62-64,  70 

obtaining  credit,  74 

of  job  lots,  71-72 

receiving  and  testing  goods,  120- 
26 

speculative,  68-69 

system  in,  72-73,   102-8 
Buying  a  business,  21-36 
Buying     power     of     possible     cus- 
tomers,   9-10,   64-G7,   117 
By-laws  of  mutual  benefit  associa- 
tions, 227-30 

Capital  invested  in  retailing,  2 
Care  of  the  store,  38,  51 
Cases,  opening,  120-21 
Cashier,  46,   113-15 
Cash  only,  143 

Charting  organization,  40-44 
Checking    stock    received    with    in- 
voices, 121 
Classification  of  expenses,  78-83 
Cleanliness  of  the  store,  212 
Commissions,  lt.i7-69 
Committee  system,  55 
Comparison  head,  49-50 
Competition,  22-23 

inliuence    of,    on    approval    sales, 
142 

influence  oi",  on  prices,  130-31 

the  comparison  head,  49-50 
Complaints,  handling  of,  144-45 
Conditions  in  store,  200-20,   235 
C;onferences,  departmental,   200-201 
Contingent  group,  154 
Control   of    merchandise   by   statis- 
tics. 4S-50,   100-105 
Cornel",  advantage  of,  S 
("r)rrespon<leiiee  ehicf,  46 
Correspondence  schools,  192-94 
Costs.     t<rr  i:xi)en8es;  Prices;  Valu- 
ation. 
Credit 

extra  charge  for.  112 

giving.  116-19,   112-43 

obtaining.  74 

v.   ca.Mh.   113 
Credit   niiinnger,  4  6,  110 
CredllM.  buying,  26-27 
CustOMier.M 

attracting   a   particular   class   of, 

buying  powcTB  of,  9-11,   04-67,   117 
complaints  of,  144-45 


239 


2-40 


Index 


goodwill  of.  20-35 
Kranlinj;:  ci-etlit  to,  116-19 
illwill  of,  3.') 

influoiu-ed  by  magazines  and  pic- 
ture snows,  (iii-Cl 
local  demands  of,  61-()2 
policies  in  dialing  witli,  13S-45 
probable  number  of,  S-IG 
Customs  of  the  people,  10-11,  61-62 
as  to  prices,  128-29 

Daily  report 

on  sales,  1M2-3,   114,  116 

on  stock,  93-95 
Delivery 

advisability  of  free,  142 

expenses  of,  79 

extra  charge  for,  141 
Demand 

for  a  proposed  store,  22-23 

for  skilled  retailers,  5-6 
Democracy  in   the  store,  232-37 
Departmental    conferences,    200-201 
Departmentalization     in     accounts, 

76-78,   88 
Depreciation,  91 
Development    of    retailing    science, 

1-7 
Discharging  employees,  233-34 
Display 

as  a  test,  64 

manager,  50-51 

relation  of,  to  advertising,  50-51 
Division  of  labor,  38-48 
Dressing  rooms,   214-15 
Drinking  water,  212-14 

Economic  welfare  work,  220-22 
Education 

for  buyers,  58-60 

for  employees,  147-48 

for  retailers,  2-7,   52,   54 

for  salespeople,  178-202 
Efficiency 

manager,  54 

records,  199-200 
Employees 

analysis  of  qualifications  of,  149- 
53 

democracy  among,  232-37 

finding  good,  147-63 

personal  interests  of,  147-48,   237 

physical    examinations    for,    160- 
63,   223-24 

profit  sharing  among,  173-76 

sources  of  applicants,  153-56 

superintendent    of,    148,  199,   204, 
233 

welfare  of,  204-30 

See  aim  Salespeople. 
Employment      department,       51-52, 

148,  159,  166 
Engel's  law,  65-67 
Environment,  14-16 
Equipment,  79-80.   See  also  Fixtures. 
Examinations,       physical,       160-63, 

223-24 
Excessive  buying,  68-69 
Exchanges,  138-39 
Expense  manager,  53 
Expenses 

classification  of,  78-83 

departmental  distribution  of,  77- 
78 


pay  roll,  164 
percentage,  base  of,  83 
reducing,  130-31 
Experience 

as  a  means  of  education,  180 
in  employees,  155 

Failures,  3 

bad  effect  of,  on  a  location,  23-24 
generally  due  to  bad  accounting, 
75 

Field,  Marshall.  3,  30 

Fire,  prevention  of.  218-20 

Fixed  prices,  140 

Fixtures,  purchasing  of,  25,   51 

Floor  manager,  45,   115,  117,  119 

Flying  squadron,  154 

Functions  of  retail  store.  38-39 

General  manager,  44,  47-48.  116 
Goodwill 

nature  of.  29-34 

purchase  of,  29-35 

valuation  of,  34-35 
Group  of  stores,  15 
Group  organization,  54-55 

Habit,    influence    of,    16,  24,  128-30. 

136 
Health    of    employees.    223-25.      See 

also     Employees;      Welfare 

work. 
Heating.  210-12 
Hire-and-fire      systems.      156.      223, 

233-34 
Hospital,  225 
House  organs,  196 
Human  nature,  knowledge  of,  185- 

89 
Humidity,  210-11 

Illwill,  35,  144-45 

Importance  of  retailing.  1-3 

Incomes  of  possible  purchasers,  9- 
10.  64-67.   117 

Individual  stock  record,  93-97 

Industries,  local,  11 

Injuries,  prevention  of,  217-18 

Inspection 

of  goods  received,  121-26 
of  sales,  113-14 

Inventories 

annual  and  semi-annual.  86 
how  to  figure  cost,  91-92 
information  to  be  gathered    87-91 
in  purchasing  a  store,  25-2o 
methods  of  taking,  86-87 
perpetual,  92-100 
sheets,  89-90 

Invoices 

for  goods  purchased,  106-8,  121 

Job  lots,  71-72 

Knowledge 

necessary  for  salespeople,  183-89 
required  in  retailing,  3-4 
See  also  Education. 

Leases,  24-25 

L,egal  adviser,  53 

Life  insurance  for  employees,  221 

Lighting,  207-8 


Index 


241 


Literature,       business,       4-5,   59-60, 
156,   ISU,   192-93 

Local  demands,  61-62 

Local  industries,  11 

Location,  8-19,   22-23 
history  of  a,  23-24 
relation  of,  to  goodwill,  33 
table  of  factors  in,  IS 

Lunch  room,  215-16 

Mailing  list,  52-53 
Markdown,  in  inventory.  98 
Markets,  knowledge  of,  58 
Markup 

average  net,   97-100 
in   pricing,  131-34 
Married  women  on  the  sales  force, 

154-55 
Merchandise.     8re  Stock. 
Merchandise    managers,    48-50,   100, 

106-7,   116 
Merchandise  plan.  100-102 
Moving    picture   theatres,    15.  60-61 
Mutual     benefit     associations,     221, 

227-30 

Name,  influence  of,  30-32 
Novelties,  62-64,   70 
Number  of  retailers,  1 
Nurses,  163,  225 

Office  manager,  52-53 

Opening  cases,  120-21 

Order  blanks  for   buyers,  72,  105-6 

Organization  of  a  store,  38-55 

charting  of,  40-44 

example  of,   44-46 

practical  considerations  in,  46-47 

purpose  of,  39-40 
Over-organization,  40 
Ownership  tests.  27 

Padded  floors,  217 

Passers-by,  8-9 

Pay.     Hr.c  Remuneration. 

Pensions,  221 

Percentage 

base,  83,   99-100,  131-32 

in  pricing.  131-34 

of  pay  roll  to  sales,  164-66 
Perpetual  inventory.  92-100 
Personal  instruction.  180-82 
I'ersonallty,  influence  of,  30-31 
Pf-r.Honal  r<-iation  to  emj)loyees.  222 
Physical  examinations,  160-63,   223- 

24 
Policies,  138-45 
Prevention 

of  Are,  218-20 

of  injuries,  217-18 
Prices 

aH  a  p<'rconfage  ba.so.  83 

at  flirr<reiit  levels,  141 

bargain,  128-30 

claBslllcatlon  bv,  70 

customary,  12S-3(i,   136 

fixed,   MO 

fixing,    127-36 

Inventories.  87-101 

unusual,  128-30 
Profit.     Krr  Palance  sheet;  Markup; 

Prloe.M. 
Profit  sharing.  173-76 


Prospects 

for  retailing,  5-6 

of  a  given  city.  23 
Psychology  of  salesmanship,  185-89 
Publicity    manager,   50-51 
Purchasing.    Sec  Buying. 

Qualifications 

for  retailing,  21-22 

of  buyers.  56-58 

of  employees.  149-53 

see  also  Kmployees. 
Quota  and  bonus  system,  169-72 

Rating  salespeople,  201-2 
Real  estate  transactions,  24-25 
Reason  for  selling,  24 
Receiving  department,  120-26 
Record.s,  52-53 

individual  stock,  93-97 

of  employees,   160,   199-200 

of  pui-chases,  106-8 

Of    sales,    48,   93-97,   100-105,   109- 
16 

of  wants.  63 
Religious  principles,  10-11 
Remuneration 

of   retailers.   5-6 

of  salespeople,  164-76,  222,  235 
Rentals,  16-19 
Reports 

and    records    of    sales,    48,   93-97, 
100-105,   109-16 

cashiers',  114 

daily  on  stock,  93-95 

for  buyers,  102-5 
Requirements  for  success,  3-4 
Rest  rooms,  216 
Retailing 

accounting,  74-84 

buying,  48-49,   56-73,   100-108 

buying  a  business,  21-36 

erluf-ation   of  .salespeople,  178-202 

finding  good  employees,  147-63 

fitness  for.  21-22 

fixing  prices,  127-36 

importance  of,  1-3 

Inventories,  86-101 

knowledge   required   In,   3-4.      See 
(il.to   Edwi.-ation. 

literature  on,  4-5,   59-60,   156,   180, 
192-93 

location.  8-19,   24,  33 

organization,  38-55 

pnllcios.   138-55 

I)rospcct8  of,  5-6 

receiving  goods,  120   26 

relation     of     employer    nnd     (>m- 
ployoo,   M7.   222,   237 

remuneration  of  s.'ile.spoople,  \C,i~ 
76.   222.    235 

snlert  sv.stem.  1o;i-19 

trnlnlng    for.    2-7.   52.   54,   178-202 

welfare  work,   204-30 

Sales 

directed   by   buyer.  ■19 

Influence    of    goodwill    on,    29-35 

14  4-45 
Influeneo  of  location  on.  8-16 
Influence  of  prlcew  nil,  i:ir.-36 
of  novel tien,  62   64 
on  auprovnl,  142 
on  credit,  116-19.  142-43 


242 


Judex 


policies,  138-45 

psychology  of,  185-89 

record   and    reports   of,   48,   03-07, 
100-105,   109-16 

relation  of  remuneration  to,  164- 
76 

slip,  109-18 

system,  109-19 
Sales  manager,  49 
Salesmanship,  knowledge  of,  185-89 
Salespeople 

education  of,  178-202 

female,  179 

influence  of,  30-31 

married  women,  154-55 

opinions  of,  on  prices,  127-28 

personal  success  of,  147 

rating  of,  201-2 

relation  of  price  system  to,  140 

remuneration  of,  164-76 

reports  of,  113 

see  also  Employees. 
Sanitary     objections     to     approval 

sales,  142 
Schools 

in  stores.  182-84,  189,  191-92 

of  business,   European,   180 

recruiting  from,  154 

relation  of  stores  to,  189-92 
Science    of    retailing,    development 

of,  1-7 
Seats,  216-17 

Security  of  employment,  234 
Selling  a  store,  value  of  a  good  ac- 
counting   system    in,    74-75 
Side  of  street,  13-16 
Slip 

blunder,   197-99 

sales,  109-18 
Sources  of  applicants,  153-56 
Speculative  buying,   68-69 
Staples,  70 
Statistics 

control    of   merchandise   by,    100- 
101 

in  charge  of  oflfice  manager,  52-53 

of  buying  power,  64-67 

of  expenses,  81-82 

perpetual  inventory  by,  97-100 

used    by    merchandise    manager, 
48-50,  100-101 
Stock 

inventories  of,  86-101 

knowledge     of,     for    salespeople, 
184-85 

pricing  of,  127-36 

purchasing    of,    25-26,  48-49,  56- 
73,   102-8 

receiving,  120-26 

testing,  121-26 
Store 

care  of,  38,  51 

demand  for,  22-23 

environment  of,  14-16 

functions  of,  38-39 

in  a  group,  15 

lease  of,  24-25 


location  of,  8-19,  22-24,  33 

organization  of,  38-55 

ownersliip  of,  27 

purchase  of,  21-36 

rental  of,  16-19 

superintendent,  51-52,  206 

value  of,  16-17 

working  conditions  in,  206-20,  235 
Street 

location  of,  12-13 

side  of,  13-16 
Success,  requirements  for,  3-4 
Suggestions    from    employees,    232- 

33 
Sunlight,  13-14 
Superintendent,  44-45 

of    employees,    148,  199,  204,   233, 
236 

of  store,  51-52,  206 
System 

buying,   72-73,  102-8 

employment,  156-57 

reinuncration,  164-76 

sales,   109-19 

Tests 

of  merchandise,  121-26 

of  ownership,  27 
Time  rate,  167-69 
Toilets,  214-15 

Trade  papers,  4,  59-60,  156,  193 
Training,  2-7,   52,   54 

of  buyers,  58-60 

of  employees,  147-48 

of  salespeople,  178-202 
Transfers,  115-16 
Transportation   included  in  cost  ot 

stock,  91-92 
Treating,  evils  of,  57-58 
Trips,  educational,  194-95 
Turnover 

a  factor  in  pricing,  135-36 

definition  of,  135 

Unemployment,  222-23 

Unusual  prices,  128-30  • 

Valuation 

of  goodwill,  34-35 

of  stock,  25-26,   86-101 
Value  of  store  and  lot,  16-17 
Ventilation,  208-10 

"Wages.     See  Remuneration. 
Wanamaker,  John,  3,  31 
"Want"  record,  63 
Weekly  report  to  buyers,  104 
Welfare  work.  52.  54,  204-30 

economic,  220-22 

hygienic,  223-25 

working  conditions,  206-20 
Wind,  14 
Working  conditions,  206-20,   235 

Young    people,    securing    of,    from 
schools,  154 


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